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Europe Ahead: Services Day in Europe

Wed, Nov 4 2009, 07:47 GMT
by ecPulse.com analysis team

ecPulse.com

First on our calendar, is Germany's PMI service in which expectations show that for the month of October final reading, it will remain unchanged at 50.9 still holding its place in expansion. This index gives us an overall outlook on the output and employment in the services sector in the nation, since it is also considered a gauge for growth.

The euro zone is also releasing its PMI service for October, with estimates revealing that it will also remain steady at 52.3; the service sector accounts for a total of two-thirds of the GDP reading. Since it remains unchanged, it shows that it is not supporting economic growth prosperity.

Also from the zone, PMI composite for October, which takes into consideration both the service and the manufacturing sector, which is forecasted to stay stable at 53.0, revealing that the sectors are holding ground and showing no change.

Since we see these sectors hold their expansion, it gives us evidence that production output is easing its slide, since these sectors now are reaching out for recovery despite the rigid lending system and instability in the financial system. When these sectors continue to improve, it will help end the worst economic growth in the zone since World War II.

Turning to the second biggest economy in Europe; we see that the United Kingdom is scheduled to release its PMI services, and in this nation, the services sector represents 75% of the GDP and is highly watched for regarding economic growth, since this is the dominate sector that fuels economic growth.

Earlier this week, we saw the manufacturing sector expand and this is further supporting growth levels. The improvement in economies around the world are a result of the government interventions and central bank measures, as the ECB is using 60 billion euros to buy governmental bonds. The BoE is also purchasing 175 billion pounds of gilts to provide tranquility in the financial system and encourage more spending, while easing the decline in general price levels.

Deflation risks around the world were triggered from the crippled demand levels, while the ECB is expecting falling price levels as a result of the recession. In other news awaited to be released today, is the PPI from the euro zone for September, which is expected to show a decline to -0.4% from 0.4%; while on the year it will plummet to -7.7% from -7.5 percent.

European stock markets reversed their gains, ended the session yesterdy by posting losses; the DJ Euro Stoxx 50 declined 50.65 points or 1.83% to 2712.30; CAC 40 fell 55.21 points or 1.52% to 3584.25 points; while the DAX shed 77.47 points or 1.43% to 5353.35 points.

Published on  Wed, Nov 4 2009, 13:18 GMT