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 Euro zone businesses had their worst month in over a year. British
services companies endured their worst month in nearly three years.
U.S. services are likely to report a deceleration later.
Thursday's downbeat surveys come just days after sister reports
showed manufacturing output across much of Asia shrank in February.
Growth also faded throughout Europe and remained sluggish in the
United States.
"Q1 is going to be ugly, but I don't think it is going to be
sustained beyond that," said James Rossiter, senior global
strategist at TD Securities.
"I don't think this is going to lead to central banks running to the
rescue, but of course we do expect some easing next week from the
European Central Bank."
Another cut in the already-negative deposit rate is likely when the
ECB meets on March 10. A Thursday Reuters poll gave a 60 percent
chance the central bank would also expand its bond-buying program
from 60 billion euros a month [ECB/INT].
On Monday, China's central bank announced it was cutting the amount
of cash banks must hold as reserves for the fifth time since
February 2015. Some analysts expect it will have to do more,
including cutting interest rates this year.
The Bank of England was once expected to be the first major central
bank to tighten policy. Now it is not expected to act until the end
of the year, and Thursday's readings may push the forecasts even
further out [ECILT/GB].
The U.S. Federal Reserve was the first big bank to move, raising
rates in December. But it is assessing how much slowing global
growth, tightening financial conditions and lower inflation
expectations will affect the U.S. economy, and it is unlikely to
raise them again this month
SLIPS AND SLIDES
The final Markit Composite Purchasing Managers' Index for the euro
zone, seen as a good guide to growth, slipped to 53.0 last month
from January's 53.6, its lowest reading since the start of 2015.
That was above a preliminary reading of 52.7 and still over the 50
mark that denotes growth.
But inflation fell to -0.2 percent last month, nowhere near the
ECB's target of just below 2 percent, and Markit's survey showed
companies cut prices at the steepest rate for a year.
In Britain, the Markit/CIPS services PMI slid to 52.7 from 55.6, the
weakest reading since March 2013 and worse than all the forecasts in
a Reuters poll of economists, which produced a median forecast of
55.1.
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It was the first time Markit had cited as a factor in business
expectations a June 23 referendum on whether Britain should quite
the European Union. That prospect may be one reason BoE policymakers
say they will boost the economy if necessary.
"Should it vote to leave, then the near-term growth backdrop will
deteriorate even further, which will likely result in renewed Bank
of England policy stimulus," said James Knightley at ING.
News from Asia was no better. Growth in India's services industry
slowed and reached a seven-month low in Japan. Activity contracted
in Hong Kong for a 12th month.
Meanwhile, Chinese results suggest a prolonged slowdown in the
world's second-largest economy and in its manufacturing is starting
to drag on services. Their activity slowed, adding to risks for
policymakers, who are counting on robust services growth to offset a
planned overhaul of bloated state companies.
He Fan, chief economist at Caixin Insight Group, said further
government measures were need to boost services and improve balance
in the economy.
"While implementing measures to stabilize economic growth, the
government needs to push forward reform on the supply side in the
services sector to release its potential," He said.
(Additional reporting by Winni Zhou and Nicholas Heath in Beijing
and Andy Bruce in London; Editing by Ross Finley, Larry King)
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