Services suffered a bout of hiccups last month.

Yesterday, in the US the Institute of Supply Management revealed its latest survey into non-manufacturing; while in the UK CIPS/Markit published the results of the UK’s equivalent survey.

In the US, the non-manufacturing survey headline index fell back below the critical 50 no change mark, coming in at just 48.7. Earlier in the week, the manufacturing survey also fell back, although at least this is still over 50.

In the UK, the services index also fell back, but, then again, the drop was not so drastic. The November reading was 56.6, down only slightly from the October score of 56.9. 

Although the UK services index is still well into growth territory, it is a tad worrying that indices measuring manufacturing and services fell on both sides of the pond last month.

Capital Economics sees this as evidence the economic recovery will be modest only.

Meanwhile, the second version of official data measuring Eurozone GDP in Q3 was released yesterday.  The data confirmed the region was out of recession with a 0.4 per cent quarter on quarter increase, but…

Domestic spending remains muted, with retail sales flat over the last month; it seems the region is still reliant on exports.

Capital Economics reckons that with wage growth set to drop, next year will see the Eurozone expand by just 1.5 per cent.

It’s a funny thing, isn’t it? We keep hearing about the end of Anglo–Saxon capitalism; of how the Franco/German model is coming into its own. But the fact is, the UK enjoyed a startling 16-year economic performance during the boom, while France and Germany limped from one crisis to the next. Then in the recession, Germany saw an even bigger contraction than the UK; while France only manged to avoid quite such a severe drop thanks to its inflexible labour force. In France it seems unemployment stays high all the time, boom or bust. And while it is true France and Germany came out of recession slightly quicker than the UK, this was largely due to the inventory cycle. Next year, with the one-off effect of a rebuilding inventory out of the way, the prognosis for the Eurozone is no better than the prognosis for the UK. Providing the backlash against capitalism is quelled, it seems likely the UK’s performance will outstrip the Eurozone in the medium term.

As for the US, once the gains from productivity improvements translate into corporate profits, expect the US, that arch paragon of Anglo-Saxon capitalism, to streak ahead again.