The Macro Sweep: global manufacturing Manufacturers have begun to feel the optimism across Europe and the US, though the same can't be said in Asia, where some countries were looking decidedly stagnant. However, shoppers are still spending plenty of money in Hong Kong on jewellery, watches and clocks. Global spending on advertisements for industry, agriculture and property grew 28.7 per cent in the first quarter of this year, according to a Nielsen report. Spending also grew strongly in the drinks sub-sector, growing 9.7 per cent. Within that, spending on spirits advertisements surged 36 per cent. Americas US: The Institute for Supply Management said its manufacturing index rose to 55.4 - the strongest since June 2011 - following a level of 50.9 in June. The reading surpassed expectations of 53.1. Asia Pacific China: The official PMI shifted up 0.2 points to 50.5, while the production index picked up to 52.4 from 52. But economists at ANZ were not convinced the data were reliable. Since the methodology was revised this year, the official PMI does not match both hard indicators and even other soft indicators (eg HSBC PMI July at 47.7 vs June 48.2), we are still questioning how accurate this indicator is . . . The official PMI appears to be distorted and may delay policy adjustment, leading to policy errors. The HSBC Purchasing Managers" Index (PMI) slipped down for the third consecutive month to reach an 11-month low of 47.7 in July, down from the 48.2 seen in June. A decline in new business, both domestically and internationally, pulled down production levels. The Macro Sweep "With weak demand from both domestic and external markets, the cooling manufacturing sector continued to weigh on employment" said Hongbin Qu, chief economist at HSBC. Indonesia: A 44 per cent increase in petrol prices and a 22 per cent rise in diesel prices on the back of a slashing of subsidies lifted the consumer price index up 8.6 per cent year on year in July. Food also jumped 5.5 per cent month on month, though this might have been due to the lead-up to Ramadan. Core inflation, excluding energy and food prices, also rose 4.44 per cent year on year. "The fuel price hike is just one factor" said Roland Randal, senior economist at ANZ. The depreciating rupiah should also contribute marginally to inflation, while the upcoming election and strongly rising accommodation costs are additional risks. The trade surplus widened to $857m in June from $590m the month before. Mr Roland thinks "exports should pick up somewhat," as demand from Japan improves. Indonesia counts Japan as its largest bilateral trade partner. The PMI edged down to 50.7 in July from 51 the month before. Su Sian Lan, an ASEAN economist at HSBC, said: "Manufacturing conditions in July improved only marginally, reflecting increasing external drag as new export orders contracted for a second straight month. Manufacturers" margins were also under pressure, with input prices rising at a record pace on the back of higher subsidised fuel prices." South Korea: Inflation quickened to 1.4 per cent in July, pushed up by high meat and vegetable prices. Petrol prices rose 0.7 per cent year on year in July and pushed up the transportation CPI 1 per cent. Housing and food, however, were still the largest contributors to inflation. Rising services costs moved core inflation up to 1.5 per cent. Economists at Barclays said, "our assessment is that inflation will remain benign. We maintain our 2013 inflation forecast at 1.4 per cent. The PMI continued to fall, from 49.4 in June to 47.2 in July. Ronald Man, an economist at HSBC, said ""The sharper contraction in new orders is reflective of weaker demand for Korean goods, especially in electronics." Hong Kong: Retail sales beat expectations, with their value increasing 14.8 per cent year on year. The biggest increase was in the jewellery, watches and clocks category, where sales shot up 42.5 per cent. Alcohol and tobacco contracted by 19.5 per cent. Australia: The manufacturing PMI fell 7.6 points to 42 in July, returning to the average level seen over the past year after a jump in June. One-third of respondents noted extreme weakness in local demand and consumer confidence, and 15 per cent pointed to political uncertainty with the looming election as the reason for poor local demand. The food and beverages sub-sector expanded, but not enough to keep the index out of its 25th month of contraction. Metal products showed a particularly sharp rate of contraction with a reading of 28.6 points. Export prices declined 0.4 per cent quarter on quarter in the second quarter of this year. Import prices also contracted at the same rate. India: The seasonally adjusted manufacturing PMI slipped to 50.1 in July from 50.3 the month before, indicating some stagnation in conditions. Output fell for the third consecutive month and order flows weakened, while inventory accumulation and employment growth slowed. Taiwan: The PMI edged downwards in July to 48.6 from 49.5 in June, indicating the third successive month of deterioration in manufacturing operating conditions. "A weaker global trade cycle has continued to weigh on Taiwan's manufacturing conditions" said Donna Kwok, economist at HSBC. The sharper contraction in new orders, especially on the external front, has been matched by weaker production. This poses challenges to Taiwan's growth outlook. For Taiwan to stay out of recession, it is critical for the government's latest stimulus measures to provide a sufficient boost to private consumption to counterbalance weaker trade flows. Vietnam: Although the PMI improved and moved up to 48.5 from 46.4 in June, activity continued to contract as new orders fell faster driven by a decline in new business from abroad. "The decline of new exports was primarily due to weakness from China demand" said Trinh Nguyen, Asia economist at HSBC. External conditions will likely improve in 4Q with US, Japan, eurozone, and China demand likely picking up. While that will provide some support, much of Vietnam's malaise is domestic born and requires a faster pace of reform. Africa South Africa: The July Kagiso PMI moved up , 0.6 points to 52.2 beating expectations with its fourth consecutive month of growth. The price component jumped 5.8 points to a 28-month high of 88, but purchasing commitments moved up to 42.8, staying within the contraction zone, while new sales still climbed up a point to 55. Europe Eurozone PMIs: The final manufacturing PMI figure showed a rise to a two-year high of 50.3. The move above the neutral line into expansionary territory was aided by the first growth in new order volumes for more than two years and output growth in Germany, Italy, Netherlands and Ireland. "The bugbear of eurozone manufacturing remains its lacklustre labour market, which contributes to the persistent joblessness of the region as a whole" said Rob Dobson, senior economist at Markit. Even here there were tentative signs of recovery, with the rate of manufacturing job losses easing to a one-and-a-half year low. Meanwhile, falling commodity prices and intense competition are still keeping inflationary pressures in the sector at bay and posing no real issues for policy makers. Greece: The rate of decline in manufacturing slowed, bringing the July PMI to its highest level in three and a half years. The bump up to 47 from the 45.4 in June was helped by a slower decrease in new orders. Germany: Manufacturing PMI showed strong growth in July, hitting an 18-month high of 50.7 in July after a reading of 48.6 the month before. Despite subdued export sales to China and the euro area, new orders expanded robustly. Tim Moore, author of the Markit report, said: "Consumer and intermediate goods producers saw the greatest rises in output volumes during July, while only the export-focused investment goods sector failed to achieve an expansion of production." France: The PMI signalled only a marginal deterioration with a reading of 49.7 in July, helped by a return to growth in production and a slower decline in new orders. Italy: The manufacturing sector expanded for the first time in two years. The PMI edged up to 50.4 from 49.1 the month before, boosted by growth in output and new orders. Spain: After hitting the neutral mark in June, the manufacturing PMI dipped back down to 49.8, pulled down by a fall in output. "While new orders increased for the second month running, this wasn't yet enough to encourage firms to raise their output or employment in July" said Andrew Harker, author of the Markit report. This seemingly reflected a lack of confidence among firms that the recent improvement in demand will be sustained, as well as the reliance on export markets for growth. Netherlands: The manufacturing sector expanded in July, aided by the fastest increase in expert orders since August 2012. The PMI climbed up to 50.8 from 48.8 in June. Ireland: The manufacturing sector picked up in July, helped by a return to growth in new orders. The PMI rose to 51 in July from 50.3 the previous month. Philip O'Sullivan, chief economist at Investec Ireland, said that "activity in the Irish manufacturing sector increased in July, aided by a spell of unusually hot weather and stronger demand from the UK." Czech Republic: The fourth consecutive rise in PMI from 51 in June to 52 in July signalled a strengthening recovery in the manufacturing sector. Output, new orders, employment and suppliers" delivery times all helped to improve conditions. UK: The manufacturing PMI reached 54.6 in July, its highest point since February 2011 and above market expectations. Improved demand both domestically and abroad helped push the new orders subcomponent up to 58.2 from 55.4 the month before. The consumer goods industry has led the recovery. However, it is perhaps even more encouraging to see increasing output and orders in both the intermediate and investment goods industries as well" said David Noble, chief executive at the Chartered Institute of Purchasing and Supply. Rob Dobson, senior economist at Markit, added: "The sector looks to be building on the foundation of the second quarter's 0.4% return to growth reported by the latest official data, with the July PMI survey also showing an improvement in forward-looking indicators." Turkey: The PMI indicated a contraction in the manufacturing sector, after new order intakes dropped for the first time in 11 months. The PMI slipped down to 49.8 from 51.2 the previous months. Dr Murat Ulgen, economist at HSBC, said: "It seems like the recent volatility in the global and the local financial markets may have impacted business sentiment negatively in the manufacturing industry. As such, the recent survey and hard data argue for downside risks to growth for this year. Nonetheless, continuous improvement in employment conditions supports Turkey's longer-term favourable outlook. Russia: Manufacturing conditions deteriorated for the first time since August 2011, with the PMI sliding down to 49.2 from 50. The domestic market was the main source of weakness. Additional reporting by Anjli Raval