GLOBAL ECONOMY ON ROAD TO RECOVERY
A FLOOD of evidence yesterday from across the world provided further confirmation that the global economic recovery was firmly on track. Stock markets in the US and Western Europe rallied in response as investors saw the chances of a double-dip recession as increasingly remote.
In the UK, a leading survey of manufacturing purchasing managers showed that Britain’s manufacturing sector returned to growth in October after a temporary contraction in September. Analysts said that the better PMI data supported the view that the UK economy was recovering, albeit slowly, and that it would see a return to growth in the fourth quarter of this year.
Across the Channel, eurozone factories staged a return to growth in October, expanding for the first time since May 2008. But the headline figure masked disparities across the single currency area, with France’s growth outpacing the other 15 countries but factories in both Spain and Italy still seeing activity contract.
In the US, a strong manufacturing survey showing the fastest rate of growth in more than three years, a surge in pending home sales and a rise in construction spending all boosted optimism, which was riding high following third quarter GDP data, which saw the world’s biggest economy return to growth.
Equally upbeat for the US economy was carmaker Ford’s $1.3bn (£793m) positive cash flow in its third quarter and its first quarterly operating profit in its home market of North America since the first quarter of 2005.
Carmakers have been particularly hard hit as consumers tighten their belts as unemployment steadily climbs, and Ford’s return to profitability is a sign that the US government’s “cash-for-clunkers” scheme is starting to have an effect.