The UK's services sector expanded at its fastest pace in eight months, while France and Germany experienced slumps in their companies. The S&P Global UK Services purchasing managers' index (PMI) rose to 54.3 in January, up from 53.4 in December. This marked the third consecutive month that the UK's services sector was above the 50 mark, indicating growth. In contrast, France's services businesses are in their longest downturn in over a decade, with the PMI showing a decline for the eighth consecutive month. Germany's services sector PMI also worsened, reaching a five-month low.
These contrasting performances in the services sectors of the UK, France, and Germany highlight the diverging economic trajectories of these countries. While the UK's services sector is showing signs of strength and expansion, France and Germany are facing challenges and experiencing downturns. This could have implications for the overall economic performance of these countries and the wider eurozone.
According to research by Allianz Trade, about 15% of small and medium-sized enterprises in the UK are at risk of defaulting on their debts over the next four years. This is higher than France at 14%, Italy at 9%, and Germany at 7%. Allianz Trade predicts that more than 7,000 firms will go bankrupt in the UK in 2024. The UK slipped into a recession at the end of last year, and Prime Minister Rishi Sunak is under pressure to boost growth. However, with inflation above target and interest rates at their highest since 2008, businesses are feeling pressure. Allianz Trade warns of a rise in global business insolvencies, with a 9% increase expected this year and the largest spikes predicted in the US, Spain, and the Netherlands in 2024.
The United States services sector is finding life amidst global economic softening. The Purchasing Managers’ Index (PMI) has been very low in New Zealand. JMI Wealth Director Andrew Kelleher compares the recent data to the Global Financial Crisis (GFC). [341bf265]