Daily Archives: September 6, 2011 @ 1:55 pm (Tuesday)

Cameron Says Nothing Is Taboo as U.K. Tries to Boost Economy

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How about suspending VAT?

Cameron Says Nothing Is Taboo as U.K. Tries to Boost Economy

By Eddie Buckle

Sep 4 (Bloomberg) — Prime Minister David Cameron said “nothing should be taboo” as the government considers extra measures this fall to boost Britain’s flagging economic growth.

“We haven’t gone far enough,” Cameron wrote in an article for today’s Mail on Sunday newspaper. “My order to Whitehall this autumn is to think even more boldly about what we can do to put the turbo-boosters on Britain’s economy.”

The government will if necessary tackle lobby groups “that are defending every last bit of the regulation that crushes business,” Cameron wrote. “And yes, if it means putting even more pressure on the banks so they lend more to small businesses, then we’ll do that too.”

U.K. economic growth slowed to 0.2 percent in the second quarter and the Bank of England cut its growth projections last month to about 1.5 percent this year and 2.2 percent in 2012. Banks have warned that implementation of any proposals to be made next week by the government-appointed Independent Commission on Banking to strengthen lenders’ financial positions should be postponed because of the faltering recovery.

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China Services PMI Falls To Record Low On Weak New Order Inflows

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This report leaves open the hard landing possibility, as defined by GDP growth under 6%:

China Services PMI Falls To Record Low On Weak New Order Inflows

September 5 (RTTNews) — An indicator of the health of China’s service sector fell to a record low in August, on the back of weak intake of new orders, latest data from Markit Economics showed Monday.

The seasonally adjusted business activity index fell to 50.6 in August from 53.5 in July, pointing to near stagnation in service sector. An index reading above 50 indicates expansion of the sector, while a reading below 50 suggests contraction.

Slowing new business inflows drove the HSBC China Services PMI reading to the lowest level since the series began in November 2005, HSBC chief economist Hongbin Qu said. This reflects the effect of property and credit tightening measures, the economist added.

“That said, the property market is unlikely to collapse not least because of Chinese households’ low leverage ratio and the fact that credit tightening is likely approaching an end. This, plus resilient consumer spending, suggests China’s service sector is likely to see a moderation in growth, and not a meltdown,” Hongbin said.

The composite output index, that measures activity across both manufacturing and service sectors, recorded a score of 50.4, unchanged from July’s 28-month low. The reading pointed to another marginal expansion in Chinese private sector activity.

On the prices front, average cost burdens faced by service providers continued to rise markedly in August, primarily reflecting pressure from higher salary payments. Despite marked cost rises, service sector firms increased their output prices only marginally in August, as strong competitive pressures restricted their pricing power.

According to data from the China Federation of Logistics and Purchasing, or CFLP, Saturday, China’s non-manufacturing sector growth eased in August, largely driven by a slowdown in railway investment. The CFLP Purchasing Managers’ Index for the non-manufacturing sector fell to 57.6 from 59.6 in July. The PMI survey for the manufacturing sector indicated the activity improved slightly in August, signaling a gradual stabilization of the domestic economic situation.

Despite a slight improvement in overall factory sector performance, exports orders declined, reflecting lackluster growth among overseas economies.

China’s economic growth cooled to 9.5 percent year-on-year in the second quarter from 9.7 percent in the first quarter, according to government data.

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