US service sector growth ticks up in July: Markit

The Nikkei/Markit Hong Kong purchasing managers’ index (PMI), which gauges business conditions in the private sector, including manufacturing, services, retail and construction, dropped to 48.2 last month, slightly down from 49.2 in June.

The wider economy bounced back from a slower start to 2015 with growth of 0.7% in the second quarter, according to initial official estimates.

In July, Ontario showed the strongest improvement of the four regions in the Canadian national purchasing manufacturing index at 55.5 – a strong showing but down from 57.0 the month before.

The UK and Eurozone’s service sectors are seeing slower growth, new figures show, but are still expanding at levels consistent with robust economic growth. Though companies remained optimistic (on average), the level of positive sentiment dipped to a survey low.

Elsewhere, in Italy, the manufacturing PMI hit a 51-month high reading of 55.3 in June, exceeding market expectations for a rise to 53.9.

On one hand China’s manufacturing sector, what the nation was traditionally known for, is contracting fast while services – what many, including the government, are pinning their hopes on to propel future growth – is surging.

Financial information services provider, Markit, which compiled the survey, said firms attributed the increase to gaining new foreign clients and product launches, leading to greater worldwide demand.

“We believe the stock market panic in early July chilled economic activity, which is what the manufacturing PMIs picked up”, ING economist Tim Condon said in a research note ahead of the Caixin PMI release. However, input prices still rose only modestly overall.

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

The report attributed the slower output rate to the manufacturing sector, which registered the quickest reduction of output since November 2011.

Underpinning the increase in output was further growth in new order inflows.

Having recorded double-digit growth rates for about two decades, China’s economy has been showing signs of a slowdown in recent years.