Europe Ahead: Services Sector in Euro Zone Stagnate

The services sector around the world were negatively affected from the global downswing as demand was crippled led from lower confidence levels, yet lately the services sector in the Europe have been showing increasing signs of recovery while in the euro zone retail sales remain volatile.

First on our calendar, is Germany's PMI service in which expectations show that for the month of February final reading it will remain unchanged at 51.7 still holding its place in expansion. This index gives an overall outlook on the output and employment in the services sector in the nation as it is also considered a gauge for growth.

The euro zone is also releasing its PMI services for February with estimates revealing that it will also remain unchanged at 52.0, the service sector accounts for a total of two-thirds of the GDP reading. As the expansion holds its place, shows that it is supporting economic growth prosper.

Furthermore, from the zone, PMI composite for February, which takes into consideration both the service and the manufacturing sector in which it is forecasted stagnate at 53.7, and this reveals that both of the sectors are holding their place in expansion, therefore not aiding the overall index.

Since we are seeing sectors remain expanding, is giving more support that the production output is improving as now finally these sectors are reaching out for recovery despite the rigid lending system and the instability in the financial system. As the dominate sectors continue to improve, will help end the worst economic period since World War II.

The main booster behind the economic sectors showing signs of improvement, are the extraordinary measures that were taken by officials as the ECB reduced interest rates down to the lowest on record while applying 60 billion euro dominated bonds to restore the health of the euro zone, while so far these measures have been successful as we saw the euro zone expand by 0.4% in the third quarter and 0.1% in the fourth quarter.

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 while the ECB  purchasing governmental bonds as a way to provide tranquility in the financial system and encourage more spending while easing the decline in general price levels.

Also from the 16-nation region today, are retail sales for January projected to decline to -0.5% from the previous null reading while on the year to inch lower to -1.7% from -1.6%. As long as retail sales remain weak shows that spending is pared in the nation as a result of the high unemployment rates which are sabotaging economic growth in the euro zone.

The highlight of this week is on tomorrow's interest rate decisions in which it is expected the ECB and BoE will leave interest rates unchanged at 1.00% and 0.50% respectively, while both central banks will mention the current position on the stimulus measures.