Services sector growth keeps China’s GDP target on track

Chris Williamson, chief economist at Markit, commented, “The eurozone manufacturing economy showed encouraging resilience in the face of the Greek debt crisis in July”.

The news on manufacturing in the latest purchasing managers’ indices (PMI) reflected disappointing data from China but more encouraging signs from Europe and India.

The final, private Caixin/Markit China Manufacturing Purchasing Managers’ Index (PMI) dropped to 47.8 in July, the lowest since November 2011, from 49.4 in June.

The report gave a lower-than-expected reading of 57.4 for July, compared to 58.5 in June, though it remains well ahead of the 50 figure used to separate growth from contraction.

“While it was welcome news to see a return to growth of activity in the Indian service sector during July, we are still looking at a modest improvement at best”, said Harker.

Greece’s flirtation with bankruptcy had threatened to wreck the currency union, but Athens agreed a framework bailout plan with its European Union partners in mid-July in exchange for stringent reforms and budget austerity.

The surveys of about 10,000 executives showed that manufacturing output rose for the thirty-second successive month in July, with the rate of expansion ticking higher from June’s recent low. “Unexpected” new contract wins, new product launches, acquisitions, organic growth and effective marketing were all factors in the sector’s expansion.

The survey showed, growth of output, new orders and employment was registered across the consumer, intermediate and investment goods sectors in the euro zone countries in July.

On prices, the survey said the rate of inflation was only marginal and well below the series long-run trend. However, the rate of job creation remained much stronger than the long-run survey average and there were widespread reports of skill shortages across the sector. Rate of employment rose at the fastest pace in two years but only “slightly”.

It is thought that two or maybe more members of the Bank’s Monetary Policy Committee (MPC) will call for a 0.25% rise in what would be the first split vote so far this year.