Global factory growth slowed to the lowest level in four and a half years in February while inflation persisted, data shows today, posing the biggest challenge for central bankers in a generation.
The JPMorgan Global Purchasing Managers' Index fell to 51.1 last month from 52.3 in January. February's reading was the weakest since July 2003, although it was still above 50, the dividing line between growth and contraction.
Stocks fell in Europe, the US and Asia today as investors digested the latest evidence of a slowing world economy that has yet to dampen inflationary pressure.
The latest data is likely to further concern the world's top central bankers, who are increasingly caught in a cross-fire between clear evidence of rapidly slowing growth and a gradual but unmistakable rise in inflation.
The US Institute for Supply Management said manufacturing shrank for the second time in three months as customers balked at making big purchases in a wobbly economy. At 48.3, the reading was down from January's 50.7 but slightly above economists' expectations. It was the weakest reading since April 2003.
Growth slowed in the euro zone, with outright contraction in Spain and stagnation in Italy. That followed data earlier in the day showing that factory activity in China and India, two of the world's emerging economic powerhouses, also cooled.
Data showing euro zone inflation held at 3.2% last month - the highest since the series began in 1997 - came alongside reports from consultancy NTC Economics showing weak manufacturing growth and the highest factory gate inflation in nearly a year.
