and should continue to highlight the ongoing weakness prevailing over the sector inline with other sectors that has been suffering the misery of the worst financial crisis since the Great Depression.
Germany will release its purchasing managers index for the services sector for the month of February, the index is expected to remain steady at 41.6, on the other hand the euro zone services PMI is expected to remain steady at 38.9 as well, and the euro zone PMI composite index is expected to remain steady at 36.2.
The German economy which represents the euro zone largest economy continues to fall deeper in recession, as lower domestic and foreign demand have had its toll on the Germany economy since it depends heavily on exports, and the fact that global demand is faltering indeed affected the German economy, which continues to contract amid the ongoing global recession.
Meanwhile the euro zone economy have been falling deeper in recession as its major economies contracted deeply and those economies including Germany, France, Italy, and Spain are expected to fall deeper in recession, especially as the European Central Bank failed so far to assure investors and consumers over the outlook for the euro zone economy.
The ECB has been reluctant to cutting its benchmark interest rates despite that the areaâ€™s growth continued to contract deeply, and the ECB preferred to wait until further developments emerge, which meant the ECB stopped short from cutting its benchmark interest rates last month and the ECB opted to wait till this month before they cut rates again.
Members of the ECB though signaled that the benchmark interest rates will not fall to zero and they stressed that zero interest rates would cause them trouble in the future, however against an unprecedented crisis like the one weâ€™re witnessing now, one must act in an unprecedented measures and accordingly the ECB should not be counting much on the supply side and accordingly they should support their voodoo economics with some effective monetary policy measures including reducing their benchmark interest rates.
Moving on to Europeâ€™s second largest economy, the U.K. economy continued to contract amid the worst financial crisis since the Great Depression, as the U.K. economy continues to feel the pinch and continues to fall deeper in recession.
The U.K. will release today their services PMI for the month of February, the index is expected to contract further amid the ongoing weakness in economic activity, analysts expect the services PMI will fall to 41.9 from the prior estimate of 42.5.
The Bank of England has been very aggressive over the last few months, as they slashed their interest rates down to 1.00 percent and they still left the door open for further easing should they feel they need to do so.
The BoE are concerned over the outlook for inflation, as the ongoing recession and falling energy and commodity prices continued to suppress inflation rates and continues to threaten with deflation, as downside risks to inflation increase as a result of lower consumer spending, tightened credit conditions and falling home values.
Moving on to the worldâ€™s largest economy, the U.S. economy remains on the receiving end of this crisis, as so far all the measures taken failed to restore stability in the financial markets or the financial system, and accordingly they failed to restore economic growth.
The Institute for Supply Management will release today their services index for the month of February, the index is expected to drop to 41.0 from the prior estimate of 42.9, the services sector continues to deteriorate further amid the ongoing recession, which continues to undermine growth prospects especially as companies continue to reduce their workforce as demand falters deeply.
The ADP employment report will be released today for the month of February, the private sector probably shed 630,000 jobs in February after shedding 522,000 jobs back in January, though a much worse revision for the prior estimate is rather very likely.
The labor sector continues to deteriorate further amid the ongoing recession, as companies which are struggling to find funds continue to reduce their costs by laying off more workers, as demand continues to fall and accordingly companies are forced to retrench their costs. The ADP estimate will be released ahead of Fridayâ€™s infamous jobsâ€™ report, which is expected to show that the unemployment rate rose in February to 7.9 percent.
Also the U.S. Treasury Secretary Timothy Geithner will be testifying today before the Congress over the recent developments in financial markets and over the outlook for economic growth, the testimony should not bring anything new that we do not know, however it might include some hints over the new financial bailout plan.
Also the Fed will release its Beige Book, which should signal further weakness in all economic sectors around the economy and that labor market conditions continued to deteriorate, while financial markets conditions also remained highly unstable, yet the report could signal the rebound in spending, as consumers seeking bargains were encouraged to spend their money in the post holiday discount season.