Factory activity in Europe, Asia slump to crisis-era lows

Factory activity in Europe and Asia slumped in September to levels not seen since the depths of the financial crisis as export demand dropped, surveys showed on Monday, reinforcing fears of a return to recession. Corresponding figures for the United States due later on Monday are expected to underscore the gloomy outlook for the global economy.
The eurozone's manufacturing contraction deepened last month as new orders shrank at their fastest pace since mid-2009. Although Europe's leaders have so far managed to prevent the eurozone debt crisis triggering a financial catastrophe, data points to worsening economic fortunes across the bloc. Even in China, which reported a slight uptick in its official PMI, economists saw evidence of a cool-down. China's factory activity typically rises in September as businesses prepare for the Golden Week holiday, but this year's increase was smaller than the average.
Markit's Eurozone Manufacturing Purchasing Managers Index (PMI) which gauges changes in the activity of thousands of factories in the countries that share the euro, fell to a final reading of 48.5 in September from 49.0 in August. Factory activity in Spain, struggling under harsh austerity measures like much of the eurozone periphery, fell at the fastest pace in more than two years, surveys showed on Monday.
French manufacturers, meanwhile, saw activity decline for the second month in a row. Even in Germany, the biggest and arguably the most prosperous economy in the 17-nation bloc, manufacturing growth effectively came to a standstill. But British manufacturing unexpectedly grew for the first time in three months, although a slide in new export orders highlighted the dangers facing the sluggish recovery.
The HSBC PMI for China's services sector rose to 53.0 in September, recovering from an all-time low of 50.6 in August, lifted by new orders. India's manufacturing output recorded its biggest monthly decline since late 2008, going from robust growth to near stall speed in just five months and a fall in the new orders index for the sixth straight month suggested more weakness ahead.
Asia's export orders have fallen since midsummer as the eurozone crisis intensified and the US economy slowed. So far, the data points to a moderate slowdown in China and elsewhere in Asia, but another US or European recession would change the equation. The ISM Manufacturing index, which measures factory activity in the United States, is expected to fall marginally to 50.5 in September from 50.6 in August according to a Reuters poll - only scraping above the 50 watermark for growth.