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China services grow, India lags

business Updated: Sep 03, 2010 21:39 IST

Global service sector surveys highlighted a growing divergence in economic recovery on Friday with a pick up in growth in China and Germany but slowdowns in India, Britain and Spain and an expected deceleration in the US.

China's service sector expanded at its fastest pace in four months in August on the back of strong domestic demand. The HSBC Purchasing Managers' Index for Chinese services rose to 57.6 in August from 56.3 in July.

The pace of recovery in the 16-nation euro one was barely changed in August from July but signalled a growing split, with a pick up in Germany offset by Spain sliding back into contractionary territory. Markit's Eurozone Services Purchasing Managers' Index for the service sector nudged up to 55.9 in August from 55.8 in July.

"The surveys highlight the uneven performance of the euro zone economies," said Howard Archer, chief European economist at IHS Global Insight.

Spain's services PMI fell to 49.2, the first time the index has slipped below the 50.0 line that separates growth from contraction since February. Britain saw its service sector activity grow last month at its slowest pace since April 2009.

Growth in India's service sector, too, slowed for a second month in August after hitting a two-year peak in June, but businesses were more optimistic about the outlook. The HSBC Markit Business Activity Index eased to 59.3 in August from 61.7 the previous month.