Time for a closer look at data showing Greece off the critical list, the US in A&E and the UK as robust may be wide of the mark
Take three countries: the US, Britain and Greece. Each one of the trio issued a health check on its manufacturing sector on Monday and very different they were, too. The US recorded the biggest drop in new factory orders in 33 years, the UK continued to expand robustly but at a slightly reduced pace, while Greece's output rose for the first time since the summer of 2009.
Appearances can be deceptive. The knee-jerk reaction to the precipitous decline in the report from the US Institute for Supply Management (ISM) was that it was entirely due to the weather. There has certainly been the mother and father of a winter going on in the US, but one of the standout features of the report was the weakness of new orders, a forward-looking indicator. Bottom line: the lack of any other evidence pointing to the American economy falling off a cliff suggests the weather was a factor in January, but it was not the only one. The world's biggest economy is not firing on all cylinders.
Similarly, the picture in the UK is slightly less rosy than it looks. The monthly Purchasing Managers' Index suggests that British industry is expanding output at 2% a quarter, but the survey has consistently been more upbeat than the official data, which showed the sector growing by 0.8% in the third quarter, and 0.9% in the fourth. With the eurozone slowly on the mend, UK manufacturing is not going back into recession. But with the pound strong and parts of the global economy clearly suffering, this is as good as it gets for now.
Then there's Greece, the classic example of it taking more than one swallow to make a summer. The slight pick-up in manufacturing shows that the flipside to the wage and welfare cuts that have caused a 1930s-style Depression is a slightly more competitive export sector. But the cost continues to be enormous. A 20% contraction in the economy has led to deflation. Deflation increases the real value of Greece's debts. That means another bailout in the short term. And, when that fails, a debt restructuring.
Economic growth (GDP)EconomicsUS economic growth and recessionEconomic policyEconomic recoveryManufacturing dataUS manufacturing dataManufacturing sectorGreeceUS economyLarry Elliotttheguardian.com © 2014 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds |
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