Daily Market Report - 06/10/2015

Growth in the UK service sector slowed further in September to its lowest rate in nearly two and a half years, a survey has indicated.

The latest Markit  service sector purchasing managers index (PMI) fell to 53.3 last month from 55.6 in August.
Markit said that its survey data indicated that UK GDP growth slowed to 0.5% in the third quarter of the year, and is entering the fourth quarter at a pace of 0.3%. This compares with growth of 0.7% in the second quarter of the year.

Chris Williamson, chief economist at Markit, said: "Weakness is spreading from the struggling manufacturing sector, hitting transport and other industrial-related services in particular.

Europe's economic recovery is showing dangerous signs of falling flat after another disappointing set of data from the single currency. September's combined Purchasing Manager's Index (PMI) of the services and manufacturing sector fell to 53.6, from 54.3 in August. This suggests momentum has petered out after a spike in activity over the summer. 

The weak numbers all but guarantee the European Central Bank will be pushed into further stimulus measures, ramping up its €1 trillion quantitative easing programme. 
Economists suggest an announcement on more QE could be due at the end of the year.

September's numbers suggest growth remained stuck at 0.4pc in the third quarter of the year, unchanged from the same period last year when the ECB had not yet launched QE.

The ISM non-manufacturing activity index in September fell to 56.9 compared to the estimated drop to 57.5 from August's 59. The pace of growth in service industries cooled from the best reading in a decade, a sign that weak wages may be pushing demand down amid signs of a slowdown in the global economy. 

Services PMI figures released from the US showed that the sector is still robust. The index came in at 55.1 for September, economists had expected a reading of 55.6. The report showed that hiring remained strong, although it is lower year on year. Business activity and incoming new work also rose at slower rates.

Key Announcements
13:30 - USD - US Trade Balance expected to fall to -$45.5bn from -$41.86bn
18:00 - EUR - Mario Draghi speech