Video: Services recover in China, but Europe wobbles
Upbeat numbers on China’s services sector lifted investor sentiment, but disappointing European figures soon dented the continent’s recovery hopes.
Editor’s note: The following is a transcript of the accompanying video. ©2020 Thomson Reuters.
A mixed picture Thursday [3 September] on recovery in global services.
China got the ball rolling with some upbeat numbers. The latest PMI index there showed activity in its service sector expanding for a fourth month in August. Although the headline figure dipped fractionally to 54, that’s still well above the key 50 point level that denotes growth. The service sector had been slower to recover than large manufacturers. That’s critical, since it accounts for 60% of the economy and half of all urban jobs in the country.
But new numbers out of Europe disappointed investors. The services PMI index there sank to 50.5 in August — still expanding, but only just, and well down on July. Economists say that suggests a post-lockdown rebound in the sector is already faltering. Demand stuttered across the euro zone even as firms cut prices, and headcounts were reduced for a sixth month.
Numbers out of the UK were little better. The Composite PMI there was revised down from an earlier flash reading, while the numbers also pointed to a decline in employment for the first time in three months.
None of that was enough to stop stocks gaining, though. Europe’s Stoxx 600 index rose around 1% in early trade as investors focused on hopes for more fiscal and monetary stimulus around the world.