With news this morning that UK service sector orders have improved, we can now anticipate growth of 0.1 per cent this quarter. A tenth of a percentage point isn't all that exciting, but it would mean that the UK would avoid a technical triple-dip recession. This means we could avoid further quantiative easing when the Monetary Political Committee announces its decisions this Thursday.
Had today's services PMI survey disappointed and recorded slower growth - or even a contraction - in output, then we would have had no hesitation in revising our forecast for this week's MPC meeting to additional QE. However, in the event the headline index of the services PMI rose between January and February, suggesting that following the weaker February manufacturing and construction surveys this week's policy decision will be a difficult one for the MPC.
The situation on the continent looks worse, as while retail sales rose, the Eurozone seems increasingly reliant on Germany. Especially as France's prospects now seem to be declining:
Chart: France GDP YoY vs Service PMI twitter.com/Darlington_Dic…— Dick Darlington (@Darlington_Dick) March 5, 2013
January’s rise in euro-zone retail sales and the fall in the composite PMI in February add to evidence that while the recession in the region is slowing, it is not over.The only growth in the region seems to be coming from Germany. But despite a small upward revision, the French index appears consistent with worryingly sharp quarterly falls in GDP of up to 1.0%. The first releases for Italy and Spain revealed renewed falls in both PMIs, also pointing to continued recessions.