Services sector gauge sees sharp uptick in growth for July

For the first time in three months, the Nikkei Services Purchasing Managers’ Index, compiled by Markit, nudged above the 50 mark that separates growth from contraction, coming in at 50.8 in July.

Business conditions in the Canadian manufacturing sector continued to improve for the second month in a row in July, but at a slower pace than June, with an increase in export sales supporting the recovery.

Reserve Bank Governor Raghuram Rajan, however, indicated that he could go for a rate cut soon if macro-economic data is favourable and monsoon turns out to be good.

A figure above 50 represents expansion while one below means contraction.

That was up from 51.4 in June – its lowest level in over two years – but well below an average of 54.3 recorded since April 2013, when Britain’s economy was starting its recovery.

And survey compiler Markit suggested the upturn was relying on financial services companies, which in July enjoyed their best month since 2013. This reflects stronger increases of new orders and output.

“Renewed falls in both total new work and new export orders led manufacturers to cut production at the fastest rate since November 2011”.

German manufacturers reported a 27th successive monthly rise in production in July, with companies attributing much of the expansion to higher demand.

“While this is a generally positive set of data, upcoming PMI data releases will indicate whether the manufacturing sector can sustain this momentum”, Lima said.

On prices, the survey said the rate of inflation was only marginal and well below the series long-run trend.

The pace of growth of new orders slowed to 52.2, its lowest since September 2014, underscoring the challenge for policymakers to achieve more balanced long-term economic growth.