Surveys point to better but patchy growth as 2013 ends

Mon Jan 6, 2014 10:55am EST
 
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By Ross Finley, Andy Bruce and Steven C. Johnson

LONDON/NEW YORK (Reuters) - Service industry growth slowed sharply in China as 2013 drew to a close but picked up across most of Europe, while U.S. firms hired more workers despite slower growth in activity last month.

The surveys released on Monday underscored a still uneven pace of global economic growth and suggested an onslaught of central bank stimulus is unlikely to dry up anytime soon.

Asian shares fell to a three-week low after the HSBC/Markit China services purchasing managers' index (PMI) fell to a two-year low of 50.9 from 52.5, highlighting anxiety about the world's second largest economy.

"That just goes to confirm everyone's suspicions that the Chinese economy is shifting down onto a lower growth path, and that we will see a more balanced growth pattern across the world this year," said Peter Dixon, economist at Commerzbank. He expects improved growth in Europe and the United States.

Indeed, most signs point to ongoing improved U.S. growth, and recent data has been robust enough to persuade the Federal Reserve to start winding down its monthly asset-purchase plan.

Even so, the economy is seen as not strong enough to withstand higher interest rates for a while, with the Fed not expected to raise them for at least another year, and Fed officials have stressed that unemployment remains uncomfortably high.

Business surveys from the Institute of Supply Management and Markit showed growth in the vast U.S. services sector slowed a bit in December.

But hiring was a silver lining in both reports, which showed employers took on more workers.   Continued...

 
A man looks at the Pudong financial district of Shanghai November 20, 2013. REUTERS/Carlos Barria