Yesterday ECB President Mario Draghi unveiled a revamp of his quantitative easing programme that allows officials to buy higher proportions of each euro area member’s debt. He said that the Governing Council has now set a purchase limit of 33 per cent of a country’s debt stock, up from 25 per cent previously.

This followed a cut in expected economic growth and inflation, led by the emerging market rout. Officials see consumer prices barely growing this year with an increase averaging 0.1 per cent. Inflation will then accelerate to 1.1 per cent in 2016 and 1.7 per cent the following year. The economy is now expected to grow 1.4% in 2015 and reach a pace of 1.8 per cent two years later.

In the US, the August non-manufacturing ISM index indicated that the service sector continued to shrug off weakness in domestic manufacturing and concerns about global growth.

While most components declined modestly, the levels remained strongly expansionary – aside from the more marginal level of prices paid. The index declined from 60.3 to 59. In the meantime the US trade deficit fell in July to the lowest level in five months as exports posted a small gain while imports declined, reflecting a big drop in shipments of consumer goods as cell phones. The deficit narrowed to $41.9bn in July, a 7.4 per cent decline from a June imbalance of $45.2bn.

Exports were up a small 0.4 per cent to $188.5bn, helped by stronger sales of US made autos and machinery, while imports declined 1.1 per cent. Moreover, US productivity in spring rose at the fastest pace since late 2013, while labor costs declined.

In the meantime, UK services grew at the weakest pace in more than two years in August, underscoring signs the economy is slowing in the 3rd quarter. An index of activity dropped to 55.6 from 57.4 in July.

While that’s above the 50 level that divides expansion from contraction, it’s the slowest reading since May 2013 and compares with a prediction of 57.7 by economists. The report follows data that showed manufacturing growth cooled in August and comes as Bank of England officials prepare to take their decision on interest rates next week.

This report was compiled by Bank of Valletta plc for general information purposes only.