Summary:
- UK services PMI 52.8 vs 53.5 exp and 51.7 prior
- 2nd lowest reading in 18 months
- GBP remains near recent lows
The third UK data point in consecutive days has shown an improvement in the reading for the services sector, although the increase was smaller than analysts had forecast. The print of 52.8 represents a decent rise on the 51.7 seen last time out, but against upbeat expectations of a 53.5 figure it is a tad soft.
The GBP is trading a little lower on the day following the data, although the weakness has been fairly contained so far. Source: xStation
To put this in perspective it is the second lowest print since the reading for September 2016 and does suggest that business activity is cooling down, in what is the UK’s largest sector by a distance. It should be pointed out that 52.8 is comfortably above the 50 mark, so the index remains in expansionary territory but there are growing signs of a slowdown.
Overall the recent data points seem to indicate that the UK is plodding along ok and not really in danger of a recession anytime soon, but economic activity is clearly lagging well behind its peers across the channel and the Atlantic.
Recent weeks have seen a series of negative economic releases for the pound, with it all beginning on Wednesday 18th April when the CPI Y/Y missed forecasts and fell to 2.5%. Since then lower than forecast Retail sales, GDP, Manufacturing PMI and today’s Services number have missed consensus forecasts and weighed on sterling.
A series of negative economic releases have weighed on the pound in recent weeks and contributed to a decline of over 800 pips. Source: xStation