Activity in China's services sector expanded at its fastest pace in six months in January, helping offset weakness in the vast manufacturing sector. As David Pollard reports, it was followed by disappointing data from Europe, adding to pressure on the ECB to ease policy again.
Good omens have been scarce in China's economy recently. But as millions make their way home for the Lunar New Year - could new services data be one? A survey of small and medium-sized businesses shows activity expanding at its fastest rate in six months. Employment rising at its strongest in six months. So - an auspicious start to 2016? IG's Alastair McCaig isn't so sure. (SOUNDBITE) (English) IG, MARKET ANALYST, ALASTAIR MCCAIG SAYING: "It is one positive in what has been broadly speaking a vast majority of negatives coming out of the Chinese economic data bank." China itself isn't so sure either. State officials see growth at between 6.5 to 7 per cent for 2016. Pressure to remain this year, they say - after a dramatic slowdown, last. (SOUNDBITE) (Mandarin) CHAIRMAN OF THE NATIONAL DEVELOPMENT AND REFORM COMMISSION, XU SHAOSHI, SAYING: "As for foreign trade last year, exports declined 2.8 percent, imports declined 14.1 percent. In total, trade was down 8 percent." Nor does Europe appear to be putting its best foot forward. Business grew in January at the weakest rate seen in the past year. Firms cut prices again for a fourth month - and at the steepest rate since March - worries over deflation intensifying. All adding to a global picture that's making central banks rethink. (SOUNDBITE) (English) IG, MARKET ANALYST, ALASTAIR MCCAIG SAYING: "The fact that we have seen the implied likelihood of US interest rates diminish from four interest rate rises ... down to none in 2016 now and more likely to be Q1 2017, shows the shift in the landslide as far as interest rate changes are concerned on the global scheme." The prospect of more ECB stimulus is already being felt. Survey compiler Markit's business expectations index leapt in January - as firms bet on more monetary easing.