Page 7 - atoday

U.S. NEWS A7
Tuesday 5 January 2016

US Financial Front:

Factory slumps in US, China stoke global economy fears

A worker carries a roll of sub flooring to be installed in a school years. growth ... have been much ity to export to them.”
bus on an assembly line at Blue Bird Corporation’s manufactur- China’s deceleration has larger than we would have Christine Lagarde, the IMF’s
ing facility, in Fort Valley, Ga. The Institute for Supply Manage- been hugely disruptive for anticipated,” Maury Ob- managing director, said
ment, a trade group of purchasing managers, issued its index of countries that have long stfeld, chief economist at last week that China’s slow-
manufacturing activity for December, on Monday, Jan. 4, 2016. exported commodities the International Monetary down would likely keep
such as oil, copper and Fund, said in an interview commodity prices low for a
(AP Photo/David Goldman) other metals to the Chinese Monday with an IMF publi- “prolonged period.”
market. China consumes, cation. Writing in the German
C. S. RUGABER The manufacturing data for example, about 60 per- Daniel Meckstroth, chief newspaper Handelsblatt,
P. WISEMAN made clear that the trou- cent of the world’s iron ore, economist at MAPI, a man- Lagarde predicted that
AP Economics Writers bles that weighed on U.S. which is used to make steel. ufacturing research group, “global growth in 2016 will
WASHINGTON (AP) — Fears factories last year have yet China’s declining appetite said that many commod- be disappointing and un-
escalated Monday that to ease. Sluggish econo- for such commodities has ity-exporting countries, even.”
the global economy could mies in major markets slowed growth in Australia, such as Australia, Malaysia Michael Arone, an invest-
struggle more than ex- — from China to Europe Brazil and Malaysia, among and Chile, have also been ment strategist at State
pected this year — a pros- to Japan — have de- other economies. forced to reduce their pur- Street Global Advisors, said
pect that contributed to a pressed U.S. exports. That The U.S. economy has also chases ofU.S. goods as such sentiments have un-
plunge in financial markets. trend has been worsened taken a hit: Its exports to their own economies have nerved financial markets.
The anxiety was height- by a strong dollar, which China fell 4 percent in the slowed. “Investors were looking
ened by reports that man- has made U.S. goods more first 10 months of last year They “don’t have the ex- for a more hopeful start to
ufacturers extended their expensive for foreigners. compared with the same port revenue, so they can’t 2016,” he said. “What they
slumps last month in the Not all the news was bad. A period in 2014. import from the rest of us,” got were a lot of reminders
United States and China, cheaper euro has helped “The global spillovers from Meckstroth said. “China’s of the risks that weighed on
the world’s two largest European manufacturing, China’s reduced rate of slowdown affects our abil- markets last year.”q
economies. Factory activ- which expanded at the
ity contracted for a sec- fastest pace in 20 months
ond straight month in the in December, according
United States and for a 10th to data firm Markit.
straight month in China. Still, China’s persistent slug-
By midafternoon, the Dow gishness may be causing
Jones industrial average broader damage than pre-
had sunk more than 400 viously thought, analysts
points — over 2 percent say. China’s government
— though the fall was also is trying to shift its econo-
due in part to rising tensions my toward domestic con-
in the Middle East. Chinese sumption and away from a
stocks fell 7 percent before reliance on exports and in-
trading was halted. vestment in roads, factories
The DAX index in Germany, and real estate.
whose export-led econo- Yet that transformation has
my is sensitive to China’s proved difficult: China’s
prospects, tumbled 4.3 per- growth in the July-Sep-
cent. Britain’s FTSE 100 fell tember quarter fell to 6.9
2.4 percent, France’s CAC percent from a year ear-
40 2.5 percent. lier, the slowest pace in six