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Economy in Brief

UK Services Sector Shows Some Life-Is It Real?
by Robert Brusca   November 03, 2010

The UK service sector diffusion index has risen to 53.19 in October from 52.80 in September. The index is not particularly strong, standing only in the 64th percentile of its range. Earlier this month the EU indices showed that the EU-wide service sector measured on a different diffusion format stood at the 61st percentile of this range. Thus the UK is about in the same circumstance as the rest of the EU on average as far as its service sector is concerned.

Services are off peak even with respect to their best level in the recovery period as the chart above documents. Construction and MFG also have pulled back. This is a feature shared by EMU nations where services and MFG both have pulled back from previously higher readings in this every expansion. Against that background the rise in services index this month raises a question mark instead of making an exclamation point.

The UK has shown some life in October but it is unclear if this rebound will have staying power. The rest of the EU region is still struggling. Services and consumer confidence in the Zone were flat in October in the earlier EU Commission report. In September Spain continues to see unemployment rising. Spain’s unemployment rate is double the EU average and still eroding. Austerity remains the name of the game in Europe. Despite UK’s bounce in the service sector in October the future remains a question mark.

Various Looks at the UK, EU and EMU Services Sector
  Oct-10 Sept-10 Aug-10 3Mo 6Mo 12Mo Percentile
UK (CIPs) 53.19 52.80 51.33 52.44 53.36 54.86 64.0%
EU Commission Indices for EU and EMU
EU Index Oct-10 Sept-10 Aug-10 3Mo 6Mo 12Mo Percentile
EU Services 5 5 5 -11.00 -13.67 -15.00 65.7%
EMU Oct-10 Sept-10 Aug-10 3Mo 6Mo 12Mo Percentile
Services 8 8 7 7.67 6.33 2.42 61.1%
Cons Confidence -11 -11 -11 -11.00 -13.67 -3.39 65.7%
Consumer Confidence by Country
Germany-Ccon 7 5 3 5.00 -0.67 -7.83 93.0%
France-Ccon -17 -18 -18 -17.67 -19.67 -18.83 50.0%
Ital-Ccon -22 -22 -21 -21.67 -22.00 -20.58 28.6%
UK-Ccon -16 -17 -13 -15.33 -14.00 -10.00 50.0%
percentile is over range since May 2000
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