Services business slowed in China in October, shrank in India and approached stall speed in Britain, suggesting the global economy is weakening just as the eurozone debt crisis reaches a critical stage. The key surveys were released on Thursday as G20 leaders met in Cannes, France, where they will discuss the crisis, and as the political crisis in Greece deepens with the country's government and future as a eurozone member in doubt.
The official China services purchasing managers' index showed slower growth in October, while India's services PMI slipped to its weakest since the 2008-09 financial crisis. There is no real concern yet that these economies, which have helped drive global growth in recent years, will slip into recession as growth rates remain very high. But that is not the case for the developed world.
Britain's dominant service sector grew at a far slower pace than expected in October, a sign that the faltering economy now faces a serious threat of contraction in the final quarter this year and could even slip back into recession. The latest evidence on services business in Britain, however, suggests the economy is barely growing. The UK Markit/CIPS services PMI slumped to 51.3 in October from 52.9, below consensus expectations.
In China, the situation is much more upbeat. China's official PMI, from the China Federation of Logistics and Purchasing (CFLP), fell to 57.7 in October from 59.3 in September, with new orders also slowing slightly. The HSBC PMI, which focuses more on smaller-to-medium sized businesses, rose to 54.1 in October, above September's 53.0 and its highest level since June, as new orders picked up for a second successive month.
Wages and fuel prices rose sharply in India, the survey showed. Wholesale inflation, India's official inflation gauge, has been above 9 percent for almost a year. India's central bank raised interest rates last week for the 13th time since early last year. In China, consumer inflation has eased from a near three-year high in July of 6.5 percent. Beijing has maintained that tackling inflation is its main policy priority but it has also shown some concern about the risks to growth.
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