Global services growth geared down a notch in June, data showed on Monday, supporting the view in financial markets that emerging and developed economies are set to cool off through the second half of the year. The reports followed a series of similar health-checks on global manufacturing last week which told a similar story and which together could stoke smouldering fears of a double-dip recession in some developed economies. China's services sector growth slowed to its weakest in 15 months and the surveys showed a similar slowdown from heady rates across Europe, where governments are taking the hatchet to budgets and where consumer spending is already lacklustre. "The euro zone debt crisis and an associated intensified tightening of fiscal policy in a number of countries is having a dampening impact on economic activity across the region," said Howard Archer, chief European economist at IHS Global Insight. The reports followed news on Friday that the US economy shed 125,000 jobs in June, the largest decline since October, showing the world's largest economy is failing to accelerate on its own as government stimulus fades. World stocks have tumbled 13 per cent over the past two months on fears that the world recovery from the worst recession in generations is faltering, although a US market holiday left them directionless on Monday. HSBC said its Purchasing Managers' Index (PMI) for China's services sector -- which unlike most developed economies, represents less than half of its output -- fell to a 15-month low of 55.6 in June from 56.4. Although that was well above the threshold of 50 that separates expansion from contraction, the loss of momentum, which was also evident in manufacturing, provided more evidence that the Chinese government's tightening campaign is biting. A similar services index for the US, due for release on Tuesday after the Independence Day holiday, is also expected to slip.

Source