European Unemployment Drops

Construction activity in the United Kingdom slowed notably during the first month of the year, with the Purchasing Managers’ Index reporting the lowest results since April of 2015. According to the release from Markit Economics, the Construction PMI printed at a value of 55.0 for January, down from December’s 57.8 and missing consensus expectations of 57.5. Builders experienced one of the weakest expansion periods in years after growth in new business showed considerable softness. Creeping economic uncertainty emerging in the last few months have seen contractors curb new orders amid a slowing demand growth. This is likely to be another contributor to a downgraded outlook from the Bank of England later in the week, with the Central Bank forecast to keep rates at a record low 0.50% where they have sat since 2009 in order to spur demand.

In spite of the inherent growing pains, the transition of the Chinese economy from an export-oriented producer to a service provider is showing signs of progress as evidenced by the latest reports from Markit Economics. According to the Caixin Services Purchasing Manager’s Index, expansion surged to 52.4, the highest level since July 2015. The value surpassed both consensus estimates as well as the prior month’s figure of 50.5 and 50.2 respectively. Employment in new businesses climbed to the highest in 6-months, but the report highlighted that prices being charged have remained low for a 5^th-straight month. Caixin Insight Group Chief Economist He Fan stated that the pace of the rise in the services sector is quite substantial, in some ways offsetting the ongoing manufacturing contraction that was reported at the outset of the week.