Afternoon Coffee: Services PMI records highest number ever in March; Global economic outlook improves; China launches digital currency

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Economic activity in the services sector continued to grow and registered an all-time high in March, according to the latest Services ISM Report on Business numbers released yesterday. The services PMI — formerly known as the Non-Manufacturing NMI — registered 63.7% last month, according to the report.

The March number was 8.4 percentage points higher than the February rate of 55.3%. March’s reading represents growth in the services sector as any number above 50 counts as growth. For a comparison to a low point in the Covid crisis last spring, the reading for April 2020 was 41.6%.

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“The previous high was in October 2018, when the Services PMI registered 60.9%,” Anthony Nieves, the chair of the ISM Services Business Survey Committee, said in a press release. “The March reading indicates the 10th straight month of growth for the services sector, which has expanded for all but two of the last 134 months."

IMF upgrades economic outlook for 2021

The International Monetary Fund upgraded its outlook for global economic growth on Tuesday, forecasting worldwide output will rise 6% this year, according to Reuters.

The IMF had previously expected growth of 5.5% less than three months ago. The upgrade largely reflects a better outlook for the US economy, which the IMF sees growing by 6.4%, the article said.

If the forecast is realized, it would mark the fastest rate of global growth since 1976, but it comes off the steepest yearly downturn of the post-war era last year — after the Covid pandemic brought the world to a near stand-still at times. The IMF said the world economy contracted 3.3% in 2020.

“Multispeed recoveries are underway in all regions and across income groups, linked to stark differences in the pace of vaccine rollout, the extent of economic policy support, and structural factors such as reliance on tourism,” the IMF report said, according to Reuters.

China launches digital yuan

China launched its digital currency, a first-of-its-kind decision to turn legal tender into computer code and control under a central bank, according to the Wall Street Journal.

Cryptocurrencies like bitcoin have foreshadowed a digital future for money, but China’s digital yuan if the first to exist within a traditional financial system. The digital yuan is expected to give the Chinese government new tools to monitor its economy and people, the article said.

Beijing is also positioning the digital currency for international use and designing it to be separate from the global financial system, which has used the US dollar as its baseline since World War II. China has embraced digitization for years, both to gain a centralized position while getting a head start on technologies of the future, the WSJ reported.

The digital yuan sits in cyberspace, available to use on the owner’s mobile phone or in a card for the less tech-savvy. China said the currency will circulate with bills and coins for some time.

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