Growth in the euro zone services sector quickened in May, helped by a the recovery in France, but activity slowed in the big emerging economies and was stable in the United States, surveys showed on Thursday.
The data suggested the European government debt crisis has yet to hit its economic recovery, although China's moves to slow its economy may mean global growth may also slow.
In the United States the services sector added jobs for the first time in more than three years, a welcome sign ahead of the Friday's payrolls report given unemployment is still high.
It's obviously encouraging that the non-manufacturing ISM index remains at a healthy level, but at the same time the current level is not consistent with rapid growth in the U.S. economy, said Zach Pandl, U.S. economist at Nomura Securities in New York.
Activity at French services firms grew at the fastest pace in nearly four years in May, although their German and Italian peers showed signs of struggling to keep up, according to the PMI surveys for individual euro zone countries.
European stocks climbed over 1.5 percent on Thursday while U.S. equities were little changed as investors focused on lackluster retailers sales in May.
EUROPE GROWTH QUICKENS
The Markit Eurozone Services Purchasing Managers' headline business activity index for the 16-nation currency bloc rose to 56.2 in May from 55.6 in April, the ninth month in a row it has been above the 50 mark that separates growth from contraction and slightly higher than a preliminary reading.
Euro zone retail figures for April showed a sharp fall, against market expectations, underlining the fragility of consumer demand vital to service industries.
A sluggish labor market, tighter fiscal policy and rising uncertainty about the economic outlook point to ongoing consumer weakness in the coming months, said Nick Kounis, economist at Fortis Bank.
Disagreements over how quickly to reduce billowing government budget deficits and restore balance to the global economy risk straining high-level Group of 20 talks that started on Thursday in Seoul, South Korea.
The purchasing managers surveys recorded order books expanding at a slower rate for service companies ranging from banks to restaurants in the UK, euro zone and China, although the jobs outlook was generally brighter.
The U.S. non-manufacturing sector grew for a fifth consecutive month and added workers for the first time since December 2007. The Institute for Supply Management said its non-manufacturing index stood at 55.4 last month, unchanged from April.
The median forecast of 68 economists surveyed by Reuters was a reading of 55.5.
Earlier Thursday a report by a U.S. payrolls processor showed private employers added 55,000 jobs in May, compared with an upwardly revised gain of 65,000 in April.
Firms in the euro zone ended a two-year stretch of job losses as the headline PMI index there hit its highest since August 2007, while services workforces in India and China continued growing solidly.
But British companies, worried about impending deep public spending cuts, shed staff in May. The UK PMI headline activity index edged up to 55.4 from 55.3 in April.
(It) provides further evidence that the recovery in the biggest part of the economy is struggling to pick up pace, said Vicky Redwood of Capital Economics.
The services sectors of China and India, which represent a much smaller portion of their economies than rich Western ones, continued their solid growth in May but at a slower pace.
The Indian services PMI fell to from a 21-month high of 58.2 in May from 62.1 last month, hurt by slowing growth in business expectations and prices charged.
China's services PMI likewise fell to 56.4 in May from 58.5 in April thanks to the government's efforts to control the economy's break-neck expansion.
The slowdown in the services and manufacturing PMIs implies that the ongoing tightening measures are starting to take effect, said Qu Hongbin, chief China economist at HSBC.
The Organization for Economic Co-operation and Development last week forecast the Chinese economy would grow 11.1 percent this year and warned overheating was becoming a problem for policymakers.