Global services growth sluggish

GROWTH IN much of the world’s service sector was flat in July as firms globally worried about the European and US debt crisis and slowing consumer demand, business surveys showed yesterday.

The US services sector expanded at its weakest pace since February 2010, with an index from the Institute for Supply Management falling to 52.7 in July from 53.3 in June. Employment conditions also weakened, boding poorly for a closely-watched US jobs report tomorrow.

In Europe, the dominant services industry was also under pressure last month, growing at the slowest pace in nearly two years.

The euro zone’s services PMI slid to 51.6 as Germany and France, the continent’s two largest economies which had supported growth, saw their indexes slip closer to the 50 point mark that divides growth from contraction.

Italy’s contraction deepened while Spain slipped into negative territory and both countries faced pressures in financial markets.

Italian service sector activity contracted in July for the second month running and Spain’s index fell to 46.5 from 50.2 in June.

“Italy and Spain softening is to be expected . . . the fiscal challenge facing them [looks] even more difficult, particularly if we see the numbers stay around these levels for several months,” said economist Victoria Cadman at Investec.

Britain surprised markets with its service sector growing at a fourmonth high on growth in new business. China’s fledgling services sector grew in July at its slowest in three months. – (Reuters)