Economic data show weak recovery

A mixed bag of data on Wednesday show that the US economic recovery remains fragile. Bloomberg reports:

Service industries in the U.S. expanded less than anticipated in January, a sign the recovery will be slow to spread from manufacturing to the rest of the economy.

The Institute for Supply Management’s index of non- manufacturing businesses, which make up almost 90 percent of the economy, climbed to 50.5 from 49.8 in December, figures from the Tempe, Arizona-based group showed today...

Companies cut an estimated 22,000 jobs in January, the smallest drop in two years, data from ADP Employer Services showed today. The report includes only private payrolls and doesn’t take into account government hiring...

Another report showed planned firings fell 70 percent last month to 71,482 from 241,749 in January 2009, according to data collected by the job placement firm Challenger, Gray & Christmas Inc. Announcements increased from a two-year low of 45,094 in December, the Chicago-based firm said today.

It was a similar picture in the euro area. Again from Bloomberg:

Expansion in Europe’s service and manufacturing industries slowed in January, indicating the economic recovery is losing momentum across the region.

A composite index based on a survey of purchasing managers in both industries in the 16-nation euro area fell to 53.7 from 54.2 in December, London-based Markit Economics said today. That compares with an initial estimate of 53.6 published on Jan. 21...

An index of services dropped to 52.5 in January from 53.6 in the previous month, Markit said today. A gauge of manufacturing increased to 52.4 from 51.6 in December...

European retail sales failed to grow for a second month in December, a separate report showed today. Sales were unchanged from November, and declined 1.6 percent from the year-earlier month.

Reuters reports a similar story in the UK.

Heavy snow and a rise in sales tax led to an unexpected slowing in Britain's service sector last month, but investors stuck with bets the Bank of England would halt its pro-growth quantitative easing programme this week.

Separate surveys showing signs of revival in consumer confidence and the labour market supported the view that the economy remained on a recovery track, albeit a tough one.

The more than two point fall in the CIPS/Markit services PMI index -- to 54.5 from 56.8 -- contrasted with a sharp rise in the equivalent manufacturing index earlier this week.