Tuesday, 6 February 2007

Services stay strong

Global manufacturing may be in a slowdown but services look relatively robust. Bloomberg reports:

Expansion in European service industries, the biggest part of the economy, unexpectedly accelerated in January after unemployment fell to the lowest on record.

Royal Bank of Scotland Group Plc's services index, based on a survey of purchasing managers in industries from banking to airlines, rose to 57.9 from 57.2 in December...

Growth at U.S. service industries also accelerated last month, the Institute for Supply Management said today, with its index of non-manufacturing businesses increasing to 59.0 from 56.7 in December...

Still, in the U.K. services growth slowed in January, a separate report showed. An index of growth based on responses from about 700 companies fell to 59.2 from 60.6 in December.

Doug Noland at PrudentBear.com notes the powerful impact the service sector growth has had on US employment but thinks that it is largely due to "rampant Credit and asset inflation". He thinks they are "Bubble Manifestations similar to the tech employment boom" and when it bursts, will "initiate job and Income losses that will make post-tech Bubble dislocations look inconsequential by comparison".

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