UK service sector growth slips but eurozone 'firing on all cylinders' - as it happened
- Sterling slips to seven week low after UK data
- UK service sector hit by fall in consumer spending
- Eurozone economic growth at near six year high
- German service sector recovers
- French and Italian services show strong growth
3.07pm GMT
Unlike the Markit survey, the latest Institute for Supply Management report shows stronger than expected growth in the service sector.
The ISM non-manufacturing PMI came in at 57.6 in February, up from 56.5 in January and better than the forecasts of 56.5. This is the highest level since October 2015.
US #ISM non-manufacturing up 57.6 Feb.#Business activity & new orders>60 while #employment solid 55.Backlogs rise & #inflation firming fast pic.twitter.com/JWAUHUMS0t
2.53pm GMT
The @Markit US #SERVICES #PMI revised 1 pt lower to 53.8, weakest since Sept. Will #ISM Non-Manufacturing PMI, at 1500gmt be soft too?
2.48pm GMT
The first of two surveys of the US service sector has come in marginally below expectations and lower than the previous month.
The Markit services PMI for February fell from 55.6 in January to 53.8, below the initial estimate of 53.9.
2.41pm GMT
US markets have made an uncertain start to trading after Thursday's falls.
The Dow Jones Industrial Average is up 25 points or 0.12% while the S&P 500 was down 0.07% and the Nasdaq Composite slipped 0.11%.
Snap is a promising early stage company with significant opportunity ahead of itself. Unfortunately, it is significantly overvalued given the likely scale of its long-term opportunity and the risks associated with executing against that opportunity. Significant ongoing dilution from share-based compensation will likely represent an additional negative consideration for the stock. We value Snap at $10 per share on a 2017 basis. As the stock priced well above this level in its IPO, we rate its shares sell.
2.11pm GMT
Meanwhile Greece's prime minister Alexis Tsipras appears positive about the current talks with creditors:
[BREAKING] Greek PM Tsipras: No reason why we can't reach a technical agreement by March 20 $EURUSD
2.09pm GMT
Over to Greece where politicians, economists and policy makers have been discussing the county's outlook at the annual Delphi Economic Forum. Our correspondent Helena Smith caught up with Greece's Tourism chief there:
Tourism, Greece's great economic engine, is about to sputter into action, with a new record that will finally help generate growth.
Speaking to the Guardian on the sidelines of the Delphi Economic Forum, Greece's Tourism chief Andreas Andreadis said figures released by airport authorities showed an extra 1.5 million airline seats were planned this year.
The boost will bring in an anticipated a1bn in extra revenues which would grow GDP by about one percent, he said. Last year sector revenues had declined despite the evident rise in arrivals with visitors spending much less per capita.
"This will be another record year but, more importantly, it will be a year when real growth will start and tourism will be the main reason," Andreadis added insisting that what Greece most needed was a ten-year growth plan and a roadmap to implement it.
1.43pm GMT
Gold is set for its biggest weekly fall for nearly four months on the growing prospect of a US rate rise in March.
The precious metal is priced in dollars and so is sensitive to increases in the US currency. It is currently down $5 an ounce at $1,229.
Both oil contracts have bounced back a little after Thursday's sharp plunge. The all-time high crude stockpile levels in the US is the number one reason behind oil's inability to move further higher in recent weeks. With net long positions on both contracts being at record high levels, it could be that money managers and other large speculators are beginning to unwind those positions, providing additional pressure on prices. The latest positioning data from the CFTC tonight and ICE on Monday may reflect this view point. Also, the fact that there were no further cuts in Russian oil production in February means it will take a little bit longer for the global oversupply to drain.
Essentially though, the long-term bearish trend has ended and I still think prices will break further higher later on this year as evidence of a tighter oil market emerges.
12.28pm GMT
Weakness in the pound after the dip in UK service sector growth has done little to prop up the FTSE 100.
Normally a dip in sterling would boost the leading index due to its preponderance of overseas earners, but it is currently down 0.22% at 7366. The pound is 0.34% lower at $1.2224 against the dollar - having earlier dropped to $1.2215 - and down 0.67% against the euro at a1.1594. Connor Campbell, financial analyst at Spreadex, said:
Part of the reason sterling's slide against the euro was so aggressive was that the Eurozone's own services PMI hit a near 6 year peak of 55.5 (a smidge lower than what was forecast). This prevented the DAX from getting out of the red, the German index shedding 30 points; the CAC, however, managed to rise 0.5% thanks to the most recent French election polls placing Emmanuel Macron ahead of Marine Le Pen in the first round of voting.
11.22am GMT
After Snap's jet-fuelled stock market debut on Thursday - a 44% surge which values the Snapchat owner at $28bn - the company's shares are being indicated higher again.
The future market is currently showing a 1.3% rise to $24.80, but now the company is listed it has to prove itself, say analysts. Chris Beauchamp, chief market analyst at IG, said:
Snap duly delivered on the hype that surrounded its IPO, with a 44% gain in the share price on day one echoing the heady days of the dot-com bubble. The underwriters and company management will be pleased to see the stock in such high demand, but the easy work is now behind it. Snap is now just another company on the New York stock exchange, and will be judged by the same metrics as others of its ilk. It has to show real user growth from this point onwards, and a firm strategy for making money off those users.
For a company that is losing almost half a billion dollars a year, may never be profitable and faces aggressive competition from larger peers, this valuation seems stratospheric. The reason is the company's popularity with teenagers and millennials, who are prized targets for advertisers. However, this industry remains extremely fickle (remember MySpace and Friends Reunited?) and many investors piling in not wishing to miss "the next big thing" are unlikely to have used the app themselves. Investors tend not to be teenagers. Warren Buffett says he will never invest in a business he doesn't understand, this may be advice well worth heeding for those tempted to take a nibble of Snap.
10.57am GMT
Over in Greece, the country's prime minister tweets:
Meeting with the French PM @BCazeneuve today in Athens. France's support to Greece in major challenges has been invaluable. pic.twitter.com/9eY6eE76sF
10.44am GMT
The UK is entering stagflation - high inflation and stagnant growth - warns Samuel Tombs, chief UK economist at Pantheon Macroeconomics. He said:
The decline in the services PMI to a five-month low in February is the clearest sign yet that the U.K. now is enduring stagflation.
The business activity index is consistent with quarter-on-quarter growth in output in the non-distribution private services sector slowing to around 0.2% in the first quarter from 0.7% in the fourth quarter. Granted, the PMI often is influenced excessively by sentiment and it was far too downbeat immediately after the referendum. But the recent rally in equity prices should have boosted corporate confidence. In addition, the services PMI was too downbeat last year because it excludes the retail sector, which benefited from a surge in consumer spending. Evidence on retail spending so far this year has been disappointingly weak.
10.41am GMT
Back with the UK, and the PMI data confirms the country's economy is likely to see slower growth this year, according to Daniel Vernazza, lead UK economist at UniCredit Research. He said:
The bigger than expected fall in the services PMI adds to the mounting evidence in recent weeks that the UK economy is slowing. It fits with the recent fall in retail sales amid a squeeze in real household income growth. We continue to expect growth to slow this year and for the UK economy to decouple from firming global economic activity...
The weaker headline figure, which refers to output/business activity, was also reflected in the detail of the report. The new orders balance fell 1.3pts. to 54.7, and both backlogs-of-work and future business expectations edged down. Set against this, the employment balance rose.
10.31am GMT
Despite weak eurozone retail sales figures, shopkeepers remain optimistic about the outlook, says economist Bert Colijn at ING Bank:
Not all that glitters is gold as strong Eurozone economic surveys mask weak performance in retail at the start of the year. The outlook for domestic demand does remain positive though, even under higher inflation rates.
While surveys about the Eurozone economy in 2017 have been very upbeat so far, retail sales disappointed in January. The 0.1% month on month decline is the third in a row, while year on year growth is just 1.2%. This suggests that recent Eurozone optimism is not translating into more shopping at the moment.
10.12am GMT
The eurozone may be starting to fire on all cylinders according to the PMIs, but the region's shopkeepers may not agree.
Eurozone retail sales fell by 0.1% month on month in January, the third fall in a row and contradicting expectations of a 0.4% increase. The year on year figure was a rise of 1.2% but this was lower than the forecast 1.6% increase.
10.00am GMT
Ben Brettell, senior economist at Hargreaves Lansdown, said:
The pace of growth in the UK services sector, which accounts for more than three-quarters of GDP, slipped slightly in February according to survey data released today...
2017 looks set to be a relatively challenging year for the economy, with higher inflation and weaker pay growth likely to squeeze household budgets. This means consumer spending could slow in real terms. Today's figure, along with the equivalent readings for the manufacturing and construction sectors, point to 0.4% GDP growth in the first quarter.
9.47am GMT
The pound slipped back to a day's low of $1.2227 against the dollar immediately after the PMI figures, with analysts suggesting the weakness in the economy was more likely to lead to lower interest rates for longer.
This is a seven week low against the US currency, while the pound has also fallen against the euro, down 0.5% to a1.1617.
Weaker consumer spending was a key cause of slower service sector growth, suggesting that household budgets are starting to crack under the strain of higher prices and weak wage growth.
The ongoing steep upturn in costs suggest that consumer price inflation has significantly further to rise, adding to our belief that inflation will breach 3% over the course of the next year.
The slowdown in the pace of economic growth signalled by the February surveys pushes the PMI back towards territory more indicative of additional policy stimulus from the Bank of England than a tightening.
Weaker UK services PMI in Feb largely linked to slowdown in consumer-facing sectors, likely due to households feeling pain of higher prices pic.twitter.com/8ts1JxrYbD
UK PMIs show price pressures still at highest for 6 years. Firms report rising costs associated with the weak pound. CPI to rise further! pic.twitter.com/zwNYLdmD73
UK 'all sector' PMI charted against historical #BoE policy changes. Latest survey data suggest policymakers to favour dovish bias pic.twitter.com/jN90clowZp
9.34am GMT
The UK's service sector grew more slowly than expected in February, mainly due to a slowdown in consumer spending.
The Markit/CIPS services purchasing managers index fell from 54.5 in January to 53.3, its weakest performance since last September and lower than the 54.2 figure expected by economists.
9.25am GMT
The positive figures from the eurozone may not last, according to Howard Archer, chief european and UK economist at IHS Markit. He said:
The final purchasing managers' survey confirmed Eurozone services activity really stepped up a gear in February to be at a 69-month high. Significantly and encouragingly, It was not only business activity that saw a long-term high, but also incoming new business, outstanding business and business expectations. Employment growth also accelerated.
Furthermore, with Eurozone manufacturing expansion picking up modestly further to a 70-month high, Markit report that overall Eurozone manufacturing and services output in February was at the best level since April 2011.
9.13am GMT
The positive mood continues with news that eurozone businesses grew at their fastest rate since April 2011.
The Markit composite index - manufacturing and services - rose to 56 in February from 54.4 the previous month. The service sector index itself climbed from 53.7 in January to 55.5. Markit chief business economist Chris Williamson said:
The final PMI numbers paint a bright picture of a eurozone economy starting to fire on all cylinders. Growth accelerated in all of the four largest member states in February to suggest an increasingly sustainable and robust-looking upturn.
The broad-based improvement has pushed the eurozone PMI into territory consistent with 0.6% GDP growth in the first quarter. The labour market is also starting to boom, with jobs being created at the fastest rate for nearly a decade.
The Markit PMIs are what triggered Bank of England easing last summer. Will the strongest readings for 6 years in the EU change ECB policy? pic.twitter.com/uDSLsmHmN9
9.04am GMT
And making a hat-trick of positive performances, Germany service sector has also improved in February after hitting a four month low at the start of the year.
Markit's services PMI for the country rose from 53.4 in January to 54.4, while the composite index climbed from 54.8 to a 34 month high of 56.1 in February. Markit economist Trevor Balchin said:
The latest PMI data add to our expectations that economic growth will strengthen in the first quarter to at least 0.6% quarter on quarter, marking a strong start to 2017.
#Germany Markit Composite PMI Final at 56.1 https://t.co/3LGh7yHPgA pic.twitter.com/S7t22bhwVm
8.57am GMT
The French service sector also put in a strong performance last month, with its fastest pace of expansion since May 2011.
IHS Markit said its services PMI index came in at 56.4 in February, up from 54.1 the previous month but slightly lower than the initial estimate of 56.7. The composite index of services and manufacturing rose to 55.9 from 54.1.
#France Markit Services PMI Final at 56.4 https://t.co/FT2IbuyhqI pic.twitter.com/MPx38kiOjg
8.52am GMT
February's rise in the Italian PMI points to pick-up in growth, implying that political uncertainty is having little economic impact so far. pic.twitter.com/yMQhlzLEWj
8.50am GMT
And strongly out of the traps is Italy, which has just reported its strongest service sector growth since December 2015.
The Markit business activity index for services companies jumped from 52.4 in January to 54.1 last month, well above the 53.1 expected by analysts. This follows a positive performance in the manufacturing survey released on Wednesday, helping lift the composite index for both sectors from 52.8 to 54.8.
8.41am GMT
WPP is the biggest faller in the FTSE 100, down nearly 6% after it lowered its growth forecast for the year. WPP's Sir Martin Sorrell also had things to say about corporate governance:
WPP's Sir Martin Sorrell has said that companies with dominant shareholders or owners such as Rupert Murdoch's Fox, Facebook and Snap that "offend" good corporate governance practices take more risks and tend to perform better financially.
Sorrell was speaking the day after Snapchat parent Snap floated on Wall Street, with the offering oversubscribed and the share price rising more than 44% to $24 on its first day of trading, despite co-founders Evan Spiegel and Bobby Murphy and early investors keeping total control of voting rights.
Related: Sorrell: companies that offend good governance tend to perform better
8.25am GMT
The dip in markets so far could be reversed if the service sector figures look reasonable, suggests Connor Campbell, financial analyst at Spreadex. He said:
After effectively sitting out Thursday, the European markets decided to give back some of the week's rapid growth this morning.
Shedding 25 points after the bell, the FTSE started Friday holding above 7350. A smattering of red in its mining sector, and perhaps just a bit of doubt about just how high the index currently sits, seemed responsible for the FTSE's fall. The pound saw similar losses, slipping to a fresh 6 week nadir against the dollar while handing 0.2% in value back to the euro.
8.07am GMT
As forecast, investors are pausing for breath again after the recent record breaking run in shares.
The FTSE 100 has fallen 0.27|% to 7362, Germany's Dax has dropped 0.5%, France's Cac is 0.3% lower and Italy's FTSE MIB is down 0.41%, while Spain's Ibex has lost 0.5%.
7.56am GMT
The London Stock Exchange, currently in the throes of a merger with Deutsche Birse, has reported a 21% rise in pretax profit to 623m, in line with expectations. The dividend is higher than expected at 43.2p a share rather than 38p, which the LSE says reflects a strong outlook.
Earlier in the week, the LSE suggested that a last minute demand from Brussels to sell its 60% share in Italian business MTS could scupper the 24bn deal.
There is little new revealed in the outlook statement. The company still claims: "The Group continues to work hard on its proposed merger with Deutsche BoIrse AG - awaiting outcome of the European Commission Phase II process on or before 3 April 2017".
We continue to favour [the LSE's] strong market position, favourable growth drivers and diversified revenue base. However, the shares are up with events in our view, especially given the downside risks should a deal with Deutsche Birse not eventually be completed.
7.49am GMT
Ahead of the splurge of service sector data, we have already had some disappointing German retail sales figures.
They fell 0.8% month on month in January, compared to expectations of a 0.2% rise and an unchanged figure the previous month. But the year on year figure showed a 2.3% increase compared to a 0.4% rise in December.
7.34am GMT
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
It's a bit like Groundhog Day. On Tuesday there was a whole host of manufacturing data from around the globe - mostly showing a positive trend - and now we get the same thing but for the service sector.
In Europe... the latest Spain, Italy, France and Germany services numbers [are all] expected to show significant improvements on their January numbers, with increases to 55.1, 53.1, 56.7 and 54.4 respectively.
The US remains the key driver of markets right now and the sudden hawkish stance of a number of previously dovish Fed officials has caught investors somewhat off guard in the past week or so, and pushing the prospect that we'll see another interest rate rise into a realistic prospect. In fact such has been the turnaround in expectations, that a rate move looks more or less a done deal.
Today's US ISM services numbers for February are expected to underscore this increased optimism with an expectation that we'll see a robust 56.5, however the acid test will be later today when a week of Fed speakers concludes with four more FOMC voting members speaking about the US economy.
Our European opening calls:$FTSE 7364 down 18
$DAX 12012 down 48
$CAC 4949 down 15$IBEX 9677 down 39$MIB 19365 down 76