Shillong, September 6: Growing concerns about the state of the global economy have been amplified by discouraging reports on service sector activity in key regions, including China, the eurozone, and the UK, as per a media report.
As per IANS, the Asian stock markets experienced declines, and the pound hit a 12-week low against the US dollar following fresh indications of China’s economic weakness. This has sparked speculation that China’s post-lockdown recovery might be losing momentum, as reported by The Guardian.
Furthermore, there are signs that the gradual increase in interest rates is impacting service sector activity negatively in both the UK and the 20-country eurozone, according to the report.
The markets were particularly unsettled by developments in China, where concerns have arisen that Beijing may need to increase support to stimulate demand. This concern emerged following the announcement that service sector activity in the world’s second-largest economy had reached its lowest point in eight months in August.
Global share prices had seen an upswing on Monday when the troubled property company Country Garden managed to avert imminent bankruptcy.
However, stock markets faced challenges after the release of China’s services purchase managers’ index (PMI). Even news that Country Garden had made interest payments on two US dollar bonds failed to boost investor sentiment, raising worries that the previously provided stimuli were insufficient in scope, according to The Guardian.
Service sector PMIs also dipped below the 50-point threshold in both the UK and the eurozone.
Adrian Prettejohn, Europe economist at Capital Economics, remarked that the final eurozone PMIs were revised downward from already low levels reported in the flash estimate two weeks ago. The services business activity PMI showed a significant decline compared to July, while the manufacturing output PMI, although slightly improved, remained firmly in contractionary territory. The expectation remains for a recession in the second half of the year, according to The Guardian’s report.