Slowdown signs - Steelmakers and car producers see slow return to growth

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The world's top two steelmakers and leading carmakers said that any return to growth would be gradual, casting doubt over some economists' forecasts for a recovery starting later this year. Upbeat earnings reports globally in the past few weeks have propelled stock markets higher and prompted investors to take on more risk in their portfolios as they grow increasingly confident the world economy is on the path to recovery.

But ArcelorMittal and Nippon Steel Corporation posted quarterly losses and ArcelorMittal's CFO said that he expected global demand for steel, a gauge of the strength of economies, to fall 10% this year.

Carmakers also gave downbeat assessments of recovery prospects.

Nissan said that it did not see a convincing recovery in global car demand, despite some bright signs in China. Honda lifted its annual forecast but the boost came from cost cuts and executives were downbeat on demand.

France's Peugeot said that Europe’s car market would not start recovering until late 2010. Retail sales in Japan offered more gloom. They fell a deeper than expected 3% in June from a year earlier, suggesting worsening job and income conditions were offsetting government stimulus measures in the world’s second biggest economy.

Mr Takeshi Minami chief economist at Norinchukin Research Institute said that "The government has taken various measures to stimulate demand but the effect isn’t spreading broadly to the economy. With wages falling and summer bonuses on the decline, consumers are in no mood to spend. The effect of government payouts to households is already tapering off."