Global growth at four-month low in February, China pledge may help
ReutersGlobal economic growth slowed to a four-month low in February, according to service sector surveys on Tuesday, but China's pledge to boost government spending to achieve 7.5-percent growth this year may help support activity in Europe and the United States also.
March 7, 2013, 12:00 am TWN
Growth was led by the vast U.S. services sector, where it accelerated to its fastest pace in a year in February, helped by a pick-up in new orders and demand for exports.
But France, Spain and Italy dragged the eurozone into a deeper downturn, earlier data showed, highlighting a widening chasm between these countries and prosperous Germany.
Meanwhile, data on China's increasingly important services sector showed that growth cooled in February and was in line with slower factory activity that suggests a modest rebound in the country's economy this year.
“Although the rate of expansion eased to a four-month low, the loss of momentum was only slight and improving inflows of new business raise the chances of a near-term reacceleration,” said David Hensley, director of global economics coordination at JPMorgan.
The Global Total Output index, produced by JPMorgan with research and supply management organizations, slipped to 53 in February from 53.2 in January, comfortably above the 50 mark that divides growth from contraction.
A global index covering services firms edged down to 53.3 last month from 53.4. A similar manufacturing PMI released on Friday fell to 50.8.
On Wall Street though, China's policy announcement and the good data on the U.S. service sector combined with supportive Federal Reserve monetary policy all combined to lift the Dow Jones industrial average to a record high, eclipsing the previous intraday high reached in October 2007, when the world was heading toward the financial crisis.
Stocks in Europe also surged, with the pan-European FTSEurofirst 300 index hitting its highest closing level in 4-1/2 years, boosted by corporate outlooks and expectations for continued stimulus from global central banks, even as Europe's troubled economy deteriorated further.
In China, outgoing Premier Wen Jibao, speaking at the opening of the annual session of parliament, announced record-high government spending for 2013. The plan is the blueprint for the incoming administration led by Xi Jinping, who will formally take over as president at the end of the session, with Li Keqiang taking over as premier.