Service sector figures to show strength of UK recovery – business live

Zing! The first healthcheck on the eurozone has arrived, and it’s a belter.

The Spanish service sector PMI has beaten expectations by hitting 57.4, close to February’s 18-month high of 57.7.

Spanish firms reported a rise in new orders, and better market conditions. This encouraged them to take on more staff, which is great news given Spain’s persistent unemployment problem.

But many companies also said they hiked prices, passing on higher costs to customers.

Markit says:

In response to rising input costs, companies increased their output prices. Moreover, the rate of charge inflation accelerated to the fastest since July 2007. Four of the six monitored sectors saw output prices rise, led by Post & Telecommunications. The Financial Services and Hotels & Restaurants categories were the only two to post declines.

Overnight, we’ve learned that Japan’s service sector grew at its fastest pace in 19 months in March.

The Japanese services PMI rose to 52.9, up from 51.3, helped by a rise in business confidence.

That suggests that the country’s economy strengthened last month, says Paul Smith, senior economist at IHS Markit:

Growth is broad-based. Both the manufacturing and service sectors are enjoying upturns, supported by firm demand for goods and services.

With capacity pressures subsequently intensifying, this is having a positive spillover into the labour market. Jobs continued to be added at a solid pace in March.

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Britain’s service sector makes up almost 80% of the economy, from financial firms in the City of London to restaurants and tourist attractions around the country.

So today’s healthcheck on the service sector should give a good insight into how the economy fared last month.

The Service sector PMI, produced by data firm Markit, lands at 9.30am GMT – and it expected to show steady growth last month.

City economists predict that the PMI will increase from 53.5, from 53.3 in February — meaning growth accelerated at a faster rate last month. That would be a good sign for economic growth in the first three months of 2017.

But after weaker-than-expected figures from manufacturing and construction companies this week, a disappointing reading can’t be ruled out.

Markit are also publishing service sector reports from across the eurozone this morning. That’s likely to show a solid rise in activity in March, as the eurozone recovery continues.

But RBC Capital warns:

We expect some weakening in the March services PMIs for Spain and Italy today.

Also coming up today

Gertjan Vlieghe, one of the Bank of England policymakers who set interest rates, is giving a speech at 1.30pm BST.

Vlieghe is one of the more dovish members of the Monetary Policy Committee, so investors will be listening out for any comments on interest rates.

Investors are getting edgier about the summit meeting between presidents Trump and Xi later this week.

The Chinese premier is in Helsinki today, on a trip to build closer economic and political ties with Finland; we might get some comments from Xi on the importance of free trade (an issue he highlighted at Davos back in January).

Former Finnish prime minister Alex Stubb is tweeting about the visit:

On the economics calendar, we get the latest UK car sales figures at 9am BST.

Then at 1.30pm BST the latest US ADP employment figures are released, showing how many new jobs were created by American companies last month. That will set the scene for Friday’s non-farm payroll report (the wider measure of US employment).

European stock markets are expected to open a little higher.