Economy: Brexit casts gloom over UK services, but China cheers

Credit: Reuters Studio
Published on April 3, 2019 - Duration: 01:40s

Economy: Brexit casts gloom over UK services, but China cheers

Brexit worries caused the UK's dominant services sector to contract for the first time in nearly three years, a survey showed on Wednesday, and euro zone business activity stayed in the doldrums. But China's services surprised with a 14-month high.

David Pollard reports.

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Economy: Brexit casts gloom over UK services, but China cheers

London's Borough Market: where the food's good, but the economic numbers are starting to smell bad.

The UK's dominant services contracted in March for the first time in nearly three years, according to a closely watched survey.

The Purchasing Managers' Index down to 48.9 - over a point below the benchmark for growth.

Brexit uncertainty, it says, is one key factor.

If not the only one: amid the U.S./China tariff dispute, the global slowdown is weighing on growth.

The world as a whole is in a "delicate moment", according to the IMF on Tuesday (April 2).

(SOUNDBITE) (English) IMF MANAGING DIRECTOR, CHRISTINE LAGARDE, SAYING: "A 25 percent tariff increase on all goods - traded between the U.S. and China.

That would entail a reduction of GDP of .6 percent for the United States, and 1.5 percent for China.

Do the math." The maths for the WTO is trade itself.

It warned on Tuesday that import/export growth would slow to just 2.6 per cent this year.

(SOUNDBITE) (English) WORLD TRADE ORGANIZATION DIRECTOR-GENERAL, ROBERTO AZEVEDO, SAYING: "The last time we had a number that low was in March 2010.

So we are not in good shape, at this point in time." Against that backdrop, China is the surprise.

Its services PMI is the best reading in 14 months, adding to signs that government stimulus policies are kicking in.

Despite a lacklustre euro zone PMI also published on Tuesday, China's recent numbers, plus optimism over U.S./China trade talks, have helped push stocks to six-month highs.

Amid the negatives, traders able to find a whiff of optimism after all.

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