GLOBAL ECONOMY-Euro zone pulls ahead, China shifts stance

* Germany supports strong euro zone services PMI

* China announces shift in monetary policy posture

* U.S. non-farm payrolls, ISM could confirm recovery view

By Andy Bruce

LONDON, Dec 3 (BestGrowthStock) – German strength propelled the
recovery of the euro zone’s dominant services economy in
November, surveys showed on Friday, after China declared a new
prudent monetary stance to help regulate its fervent growth.

With U.S. jobs and industry data due later on Friday
expected to confirm a sense the economic recovery there has
become self-sustaining, the chances of the global economy
tipping back into recession are disappearing.

In the euro zone, purchasing managers indexes — taking in
more than 2,000 businesses ranging from banks to hotels — rose
to 55.4 from 53.3 in October, easily above the 50 mark
separating growth from contraction.

That strengthening recovery, however, was dominated by
France and Germany as debt-laden members showed scant sign of
progress.

“The risk of a double-dip is perhaps receding based on the
recent activity numbers we’ve been getting,” said James
Knightley, senior economist at ING Commercial Banking.

“We’d still suggest the recovery is going to be pretty soft
relative to previous instances because of fiscal austerity, and
the sovereign debt story in the euro area.”

The services PMIs made gloomy reading for two of the
countries caught in the middle of the euro zone debt crisis.

In Ireland, service sector growth was sluggish. Spain,
tipped by a small minority of economists as next in line to
follow Ireland for an EU/IMF bailout, saw its service sector
contract for the fourth month in a row in November.

Better-than-expected euro zone sales figures on Friday,
which showed 0.5 percent growth month-on-month in October, were
similarly powered by Germany, while the UK services PMI showed a
slight slowdown in what has so far been a strong recovery.

The official PMI survey of China’s services companies showed
growth slowed sharply, with the index slipping to 53.2 in
November from 60.5 in October, a nine-month low.

However, China’s far more dominant manufacturing economy
revved up production in November, PMIs showed on Wednesday.
[ID:nTOE6B001C]

CHINESE PRUDENCE

While Europe’s debt burden and austerity measures will keep
economic growth in the low single-digits for the foreseeable
future, Chinese policymakers announced a change in posture to
help keep in check their fast-growing economy. [ID:nTOE6B2062]

The Communist Party’s top leaders decided to announce a
switch to a prudent monetary policy from a moderately loose
stance, a change that could pave the way for more interest rate
increases and lending controls.

Chinese and global markets shrugged off the Politburo
announcement and the PMIs, with investors taking the view that
the new wording was an affirmation of the gradual tightening
that Beijing has already started to implement in recent months.

“It means that all sort of monetary policy tools to control
liquidity and to control inflation can now be used,” said Ken
Peng, an economist with Citigroup in Beijing.

“In the past we’ve been clearly focusing on administrative
measures. Going forward we could be using more price adjustments
via interest rates,” he said, adding that he expected five rate
increases by the end of next year.

Payrolls data in the U.S. due at 1330 GMT are expected to
show the economy added 140,000 non-farm jobs in November, with
private hiring increasing by more than 100,000 for the fifth
month running, according to a Reuters survey. [ID:nN02238002]

In October, U.S. employment increased by 153,000.

Economists also expect the U.S. non-manufacturing ISM PMI
survey, due at 1500 GMT, to rise to 54.8 in November from 54.3,
which would give further credence to perceptions that the U.S.
economic recovery has gained some momentum of its own.

“There is a lot of optimism that the economy is on the
rebound and definitely has turned around,” said Barbara Byrne
Denham, chief economist of Eastern Consolidated in New York.
(Additional reporting by Zhou Xin and Simon Rabinovitch in
Beijing, and Lucia Mutikani in Washington, Editing by Patrick
Graham)

GLOBAL ECONOMY-Euro zone pulls ahead, China shifts stance