Home' Trinidad and Tobago Guardian : February 11th 2016 Contents FEBRUARY 11 • 2016 www.guardian.co.tt BUSINESS GUARDIAN
INTERNATIONAL | BG21
Global economic growth began
2016 on a weak note, surveys
of business activity suggested
on Wednesday, and with
inflation remaining low cen-
tral banks are seen under
pressure to keep monetary policies easy.
US and European stocks were lower on
Wednesday in the wake the business surveys,
though weak oil prices continue to be a major
factor in stock and bond markets.
US service sector growth slows
US service sector activity slowed in January,
suggesting economic growth weakened at the
start of the first quarter even though the labor
market remained resilient.
The US service sector purchasing managers
index (PMI) from data vendor Markit for Jan
fell to 53.2, the lowest since October 2013, from
54.3 in Dec. An index reading above 50 indicates
expansion in the sector.
Markit s US composite PMI for both the
service and manufacturing sectors fell to 53.2
from 54.0 in December.
An alternative reading from the US Institute
of Supply Management (ISM) showed the serv-
ice sector PMI fell to 53.5 in January, the lowest
since February 2014, from 55.8 in December.
ISM s US manufacturing sector PMI for Jan-
uary, published Monday, showed activity con-
"Going back a half year or so, it had seemed
that the weakness in the economy was fairly
isolated in the manufacturing sector as well
as a few other areas, mainly energy and exports,"
said Daniel Silver, an economist at JPMorgan
in New York.
"But we now have these surveys showing
that the service sector has weakened as well
over the past few months."
Euro zone activity weak
Euro zone business activity started 2016 at
its weakest in a year, adding to pressure on the
ECB to ease monetary policy again.
Markit s euro zone service sector PMI fell
to 53.6 in January from 54.2 in December.
Markit s euro zone composite PMI, seen as a
good guide to economic growth, fell to 53.6
from December s 54.3.
Markit said the euro zone PMIs point to
growth of 0.4 per cent at the start of the year,
in line with a January Reuters poll.
The European Central Bank is expected to
cut its deposit rate further into negative territory
in March and may increase the 60 billion euros
a month it currently spends buying bonds, a
Reuters poll found.
"Deflationary pressures intensified, as lower
oil prices impacted both input and output
costs, consistent with our view that the mod-
erate euro area recovery will continue to take
place in a missingflation environment ", said
economist Apolline Menut at Barclays Cap-
In one bright spot, retail sales across the 19
countries using the euro increased in December
as sales of food, drinks and tobacco rose over
the Christmas period, according to official data
released on Wednesday.
However, Britain s service sector growth was
unscathed despite firms concerns about the
risk of a referendum on European Union mem-
bership likely in June.
The UK Markit/CIPS services PMI edged
up to 55.6 in January, from 55.5 in Dec, to a
level it has surpassed only once since July last
Britain s economy looks set to expand by
0.6 per cent in the first quarter of 2016, picking
up from estimated growth of 0.5 per cent in
the last three months of last year, Markit said.
A reading on Britain s manufacturing sector
published on Monday showed the factory sector
also grew, while research group NIESR said
earlier it expects Britain s economy to grow
2.3 per cent this year, a slight improvement
The Bank of England is expected on Thursday
to keep interest rates at their record low of 0.5
per cent, where they have been kept since
Activity in China s services sector expanded
at its fastest pace in six months in January,
helping to offset the weakness in its manu-
The Caixin/Markit service sector PMI rose
to 52.4 in January from a 17-month low reading
of 50.2 in December. The increase was the
largest since August 2014.
On Monday the Caixin/Markit China man-
ufacturing survey had shown the factory sector
shrank for an 11th consecutive month in Jan-
A composite Caixin output index covering
both manufacturing and services rose to just
above 50 in January.
In 2015, the contribution from the services
sector to China s GDP climbed to 50.5 per cent.
China s official manufacturing PMI showed
manufacturing activity contracted at its fastest
pace since August 2012, while the official service
sector PMI also suggested service sector growth
slowed from December.
China s economy grew 6.9 per cent in 2015,
the weakest pace of growth in a quarter of a
"The government should continue to deepen
reform, relax administrative controls and reduce
restrictions on market entry for service
providers," said He Fan, chief economist at
Caixin Inight Group.
Japan also saw better news with activity in
its service sector in January growing at the
fastest pace in five months.
The Markit/Nikkei Japan service sector PMI
rose to 52.4 in January from 51.5 in December,
remaining above the 50 threshold for the 10th
In 2014, services
accounted for 65 per cent
of Japan s gross domestic
product, while manufac-
turing had a 21 per cent
The Bank of Japan
stunned investors last
week by introducing neg-
ative interest rates to pre-
vent concerns about a
weakening global econ-
omy from derailing infla-
Activity in India s serv-
ices sector increased at
its fastest pace in more
than 18 months in Janu-
Nikkei/Markit PMI at
54.3 in January from the
53.6 in December, the
seventh straight month
above the 50-level.
India s manufacturing
returned to growth in
January according to a
similar survey published
earlier this week.
The Reserve Bank of
India held its benchmark
interest rate at 6.75 per
cent on Tuesday. Asia s
third-largest economy is
expected to grow at a
steady rate and outpace
China over the coming
on weak note
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