Global services weaken as Europe slides into recession

ECB Decision

Service industries in the U.S. probably expanded in September at about the same pace as in the prior month, indicating the biggest part of the economy is making scant progress. The Institute for Supply Management’s non- manufacturing index, which covers almost 90 percent of the economy, fell to 53.4 last month from 53.7 in August, according to the median forecast of 77 economists in a Bloomberg survey.

The European Central Bank, which has pledged to purchase government bonds along with the region’s rescue fund to fight the fiscal crisis, will leave its benchmark interest rate at 0.75 percent at a meeting tomorrow, a Bloomberg survey shows. The central bank last month lowered its euro-area economic forecast for this year, predicting a contraction of 0.4 percent instead of 0.1 percent. In 2013, th economy may expand 0.5 percent, it said. That’s half the pace projected in June.

The euro-area economy contracted 0.2 percent in the second quarter from the previous three months.

“Essentially flat retail sales in August and deepened service sector contraction in September makes further euro-zone gross domestic product contraction in the third quarter look ever more inevitable,” said Howard Archer, chief European economist at IHS Global Insight in London. “This would put the eurozone back into recession in every sense of the word.”

Bloomberg News

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