According to a recent survey report, UK service sector growth has slowed further in last month to its lowest point in last 2.5 years, raising fears among many that the UK economy may be wavering.
Data firm Markit’s recent report says UK’s purchasing managers index (PMI) fell to 53.3 in September from 55.6 in August. Anything over 50 is regarded as growth. But the fear comes from the fact that it is the lowest point since April 2013 when weak UK manufacturing and global uncertainty weighted on businesses across Britain. Businesses have reported that in the current global economic uncertainty, some clients are reluctant to place new contracts, so, new businesses across UK have slowed down.
According to Markit’s data, the GDP growth of UK slowed to 0.5 percent in the 3rd quarter and is entering the 4th quarter of the year at a pace of 0.3 percent.
Chief economist at Markit, Chris Williamson, said that the weakness of UK economy is spreading from struggling manufacturing sector, striking transport and other sectors in the industrial related services. Meanwhile financial market jitters and global economic worries have knocked wider business service sector confidence. Chris also mentioned that consumers were very cautious and careful spending their money on leisure related activities like on hotels and restaurants.
Eurozone Growth Slows Too
According to the most recent healthcheck of the region’s service sector, Eurozone private sector too has slowed down and hit a four-month low in September. But it also indicated that higher output and new orders have created more jobs in Eurozone. The PMI of Eurozone has fell to 53.6 last month from 54.3 in August, as growth slowed down in Germany, Italy, Spain and Ireland. Although this indicates the businesses keep growing, but in a much slower pace.
The Eurozone service sector PMI too slowed down and fell 53.7 (lowest in last 7 months) from 54.0. Although France (51.9) cracked back some grounds in its PMI, Ireland (59.5), Spain (54.6), Germany (54.1) and Italy (53.4) have hit 2-16th month’s low PMI. Chris thinks slowing down of service sectors in these economies going to put serious pressure on European Central Bank as European economy may be faltering as well.
No Sign of Panicking in European Stock Markets
In spite of news of European service sector slowdown, indexes in European stock markets are not falling and investors seem to be in real confidence that US Federal Resave System will not raise rates thin months, and possibly not before the next year.
With the news that services firms in France caught up a bit in last month PMI, the performance of France’s CAC index is the best. Although the EU economy is believed to be slowed down, there is no sign in the indexes of stock markets around Europe.
Raising indexes across Europe under reports on slow down of service sector growth across Europe, the next few days going to be very crucial and things might change very quickly.