Europe and US hit by manufacturing slowdown

Global manufacturing slumped last month as economies across Europe and the US struggle to emerge from a recent soft patch, separate surveys showed yesterday.

Global manufacturing slumped last month as economies across Europe and the US struggle to emerge from a recent soft patch, separate surveys showed yesterday.

Manufacturing in the eurozone shrank for the first time in more than two years in April, prompting analysts to predict that the region was heading for zero GDP growth in the second quarter. And there was a downbeat picture in the US, where a private survey showed that the pace of manufacturing growth had slowed in April to the lowest since July 2003.

Companies trimmed their inventories last month after slowing demand in the first quarter prompted stockpiles to mount at their fastest rate in about five years.

The slowdown in US factory activity, as measured by the Institute for Supply Management, wrong-footed economists. The index of activity fell to 53.3 in April from 55.2 in March. However, Wall Street is expecting the Federal Reserve to raise interest rates by 25 basis points to 3 per cent today.

The soft manufacturing data sent the price of crude oil to a two-month low at $49.50 a barrel.

In the eurozone, the biggest monthly slump in manufacturing was in France, where the Purchasing Managers' Index dived to 49.8 in April from 51.9 in March. Manufacturing also contracted in Germany and Italy.

Economists said the falls would increase calls on the European Central Bank to cut the base rate, which has remained fixed at 4.75 per cent.