The Economic Calendar reported that growth in China’s services sector weakened for a second consecutive month in May, underscoring Beijing’s challenge of restructuring the world’s second largest economy away from investment and exports toward consumption.
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Manufacturing production growth eased in May, which combined with the slowdown in services resulted in a weaker increase in private sector output, the survey said. The Markit/Nikkei Japan PMI showed the fastest contraction in three years. A Reuters poll predicted 0.4 percent growth.
And CIPS’s latest survey signals uncertainty ahead of the referendum on membership of the European Union is having a detrimental impact on the business performance of more than one-third of United Kingdom manufacturers.
Germany, France, Spain and Ireland saw accelerated growth in services business activity for May, while Italy contracted slight for the first time since December 2014.
U.S. manufacturing activity picked up slightly in May but still showed weakness as the global economic slump continues to weigh, according to the Institute of Supply Management survey Wednesday.
“Consumer spending is set to slow this year because of the fading effects of falling oil prices”, said Stephen Brown at Capital Economics.
Economists surveyed by The Wall Street Journal had expected a May reading of 50.3. China’s gross domestic product expanded 6.7% in the January-March period, the weakest in seven years and confirming the slowing trend in the economy. The data so far indicate that the second quarter is likely to see the economy grow by just 0.2 per cent. Data also suggested that the drop in total new orders was driven by the domestic market, as worldwide demand rose slightly.
“The official data clearly show that public sector construction is being squeezed, while the revival in house building has run into skilled labour shortages”.
The Nikkei Manufacturing Purchasing Managers’ Index released on Thursday rose marginally to 50.7 in May from 50.5 in April.
The final Eurozone services business activity index posted 53.3 in May, above the flash estimate of 53.1 and exceeding April reading of 53.1.
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The employment index registered 49.2 points, marking the sixth consecutive month of contraction.
