A global rebound but it’s still fragile

India, at the epicentre of emerging market turmoil, saw its manufacturing activity shrink for the first time in four-and-a-half years, however. Lacklustre performances in France and in some other Asian manufacturers also highlighted the fragility of the rebound.

The US Institute of Supply Management is set to publish its bellwether PMI for US factories today.

The data comes as markets are bracing for the US Federal Reserve to begin winding down its huge bond-buying programme, itself a signal the central bank of the world’s largest economy thinks the recovery is on track.

That prospect, however, is causing concern in some of the emerging economies that have most benefitted from the US stimulus.

“The bag is getting more full with better numbers. The pick-up in the Chinese PMI is helpful, that was the one that was worrying, that’s the big one in terms of sentiment, with a bit of help from the European numbers,” said Victoria Clarke at Investec.

Factory activity in the eurozone rose at its fastest pace in over two years while China’s manufacturing sector grew in August for the first time in four months, according to business surveys published yesterday.

Markit’s Euro zone Manufacturing Purchasing Managers’ Index (PMI) jumped to 51.4 from 50.3 in July – the first month the index had been above the 50 line that signifies expansion since February 2012.