(menafn – ecpulse) After the release of downbeat manufacturing data from global economies, the turn comes to the services, which is largest in many European economies, to give a complete picture about the health of the economy in the second quarter, ahead of major events this week.
In the euro area, services sector is predicted to record a contraction of 46.8 in June, where the composite index will show a shrink for the fifth consecutive month to 46.0, noting that a reading above 50 means expansion and below it is contraction.
Data released at the beginning of the week showed that from the euro area showed that the manufacturing sector recorded a contraction for the fifth consecutive month in June as the final reading came in at 45.1, triggered by a contraction in the German gauge to 45.0.
The European economy, suffering the blues of the debt crisis which is set to complete three years, probably will experience a recession in the second quarter after recording 0.0% growth in the first quarter.
Euro area unemployment rose to 11.1% in May from 11.0 in April as the sharp austerity measures announce by European governments to trim the huge budget deficit shaved growth prospects.
The major sentiment is surrounded with concerns after the measures announced by EU leaders last week as they will wait to see the effect on the bond market with Spanish debt sale coming ahead on Thursday, where the main highlight is predicted to be on the ECB rate decision.
The governing council is estimated to slash the borrowing cost by 25 basis points to a record low of 0.75% to boost the waning recovery.
Also, eyes will track negotiations between the new Greek coalition government and troika over bailout terms as the Greek government aims to ease terms as it promised its voters.
In the U.K., services data will also be out with expectations the sector will witness an ease in expansion to 52.8 in June from 53.3 in May, referring that manufacturing saw a contraction of 48.6 last month from 45.9 a month earlier.
The slowdown seen in the British major sectors add to worries the economy will continue in recession in the second quarter. Yesterday, the British Chambers of Commerces quarterly economic survey stated that too slowly to maintain a sustainable recovery.
Hence, expectations are in favor of seeing a boost in stimulus by the BoE on Thursday to boost growth and avoid the negate effects of the European debt crisis.