UK Services Purchasing Managers Index (PMI) was released at 9:30 on Wednesday, slightly above expectations at 58.6, versus April’s 58.7. This is another strong print for the UK economy and reinforces the strength in the economic recovery. The services PMI accompanies strong survey reports from the manufacturing and construction sectors, pointing towards a relatively balanced recovery.
A highlight of the statistical release was the service sector employment growth strengthened to joint fastest rate in 17 years. It was also reported that wages were reported to have increased, pushing up labour operating costs.
Sterling jumps to $1.6728 on UK services PMI— Chris Adams (@chrisadamsmkts) June 4, 2014
In the FX markets Sterling was bid against the Greenback, following the release, with traders buying on the back of the strong data up to 1.6728. Sterling has weakened following multi-years high, nearing the psychological 1.70 level. There will be calls that the Bank of England should begin to increase interest rates, to wean the UK economy off of the ultra-loose monetary policy. The BoE’s forecasts have the majority of analysts expecting a Q1 – Q2 2015 first rate rise.
The May Markit/CIPS UK Services PMI®