London, Sydney: Massive monetary stimulus from Chinese and European central banks has done little to spur factory growth, moving a debate over more easing up the agenda and raising doubts over whether US interest rates will rise this year.

A crop of industry surveys out on Monday pointed to October as another subdued month. Activity in China’s colossal factory sector shrank as global demand stuttered while Eurozone factories again resorted to slashing prices to drum up trade.

“We do think there is more easing to come in China. They are in the midst of a long-running easing cycle that is probably going to go on until late next year,” said Andrew Kenningham at Capital Economics.

“The ECB is likely to announce something further in December. The concerns there are not so much about growth but about the prospects for inflation.”

More than half a year after the ECB started pumping in 60 billion euros a month of new money through its quantitative easing programme, the currency bloc’s relatively downbeat manufacturing survey may make disappointing reading for policymakers.

The central bank has failed to lift inflation anywhere near its target of just below 2 per cent, and data on Friday showed prices were unchanged last month, heaping more pressure on the bank to act.

It was already almost certain the ECB would ease monetary policy in December, increasing or extending its stimulus programme and further cutting the deposit rate, a Reuters poll of economists taken ahead of the inflation data found.

Beijing has also rolled out a raft of support steps to avert a sharper slowdown, including cutting interest rates six times in the past year, but the stimulus has been slower to take effect than in the past.

The pedestrian surveys will focus attention on the US Institute for Supply Management (ISM) measure of manufacturing due later on Monday, which is forecast to have flatlined in October.

Having taken a rain check on a long-speculated rate rise in September, the Federal Reserve last month surprised markets by downplaying global growth worries while opening the door wide to a hike in December.

“One of the reasons they didn’t move in September was concerns about the state of the global economy and particularly China. Our view is that most likely they will wait until next year but they may decide to move in December,” Capital Economics’ Kenningham said.

Stocks fell in Europe and Asia on Monday after the further evidence of economic slowdown in China.

Little cheer

Markit’s final Eurozone manufacturing Purchasing Managers’ Index was 52.3 last month, only slightly up from the September and preliminary October reading of 52.0. It has, however, been above the 50 mark that separates growth from contraction for over two years.

There was only modest growth in Germany, Europe’s largest economy, though Italy stood out with activity increasing for the ninth straight month and at its fastest pace since July, In China, manufacturing industry unexpectedly contracted for a third straight month, according to the official survey out on Sunday, just missing market hopes for a break-even 50.0 reading, while new export orders shrank again.

Monday’s Caixin/Markit China PMI, which focuses on small and mid-sized companies, rose. But at 48.3 in October, it still pointed to an eighth month of contraction.

“Overall, the flat PMI suggests the still-weak underlying growth momentum in Q4 and we continue to look for more signs of near-term growth stabilization,” said Jian Chang at Barclays.

The only promising news came from Japan and Britain.

The Markit/Nikkei PMI hit its highest in a year at 52.4, yet its economy remains at risk of recession and markets are betting the Bank of Japan will have to expand its asset-buying campaign.

In Britain, which doesn’t use the euro, factory activity unexpectedly surged to a 16-month high helped by a recovery in export orders although economists remained cautious.

“We hesitate to conclude from October’s Markit/CIPS manufacturing survey that the sector’s recession is over,” said Samuel Tombs at Pantheon Macroeconomics.

“In one line: take with a pinch of salt.”