The world economy is heading for its third straight mid-year lull after manufacturing output shrank in Europe and slowed in China, leaving the US under pressure to drive global growth. A gauge of manufacturing in the 17-nation euro zone fell to a three-year low of 45.1 in May, indicating a 10th month of contraction, while unemployment reached 11 percent, the highest on record. China's Purchasing Managers' Index dropped to 50.4 from 53.3, the weakest production growth since December. Signs of a renewed international slowdown are mounting as Europe's two-year debt crisis threatens to engulf Spain and spread abroad by undermining demand and investor confidence. With China's economy also decelerating, economists are looking to the US for growth. Data today is forecast to show hiring picked up in May. "Things are turning down again and the underlying state of every economy is pretty ropey," said Rob Carnell, chief international economist at ING Bank NV in London. "The world may avoid recession, but large chunks of it will remain in it." German manufacturing faded to its weakest since June 2009 as its PMI fell to 45.2 in May from 46.2 in April, the third monthly contraction. France's measure slid to 44.7 from 46.9 and Spain's declined to 42 from 43.5. By contrast, Greece, the epicenter of the debt crisis, saw its gauge rise to 43.1 from 40.7 and Italy's rose to 44.8 from 43.8. A reading below 50 still signals contraction. One result is rising joblessness. The euro area's 11 percent unemployment rate in April and March is the highest since the data series began in 1995.
