The UK August services PMI is a miss, falling to a 11-month low of 53.2 in the headline reading after 53.8 in July. The median forecast had been for a more modest dip to 53.5. Survey respondents noted that subdued client demand and heightened uncertainty about the domestic economic outlook had weighed on business activity during August. New orders rose at the second slowest pace since September last year, and some respondents in the sector reported delayed spending decisions among clients. Despite this, job creation was at its strongest since early 2016, while input price inflation rose by the quickest pace in six months, with the blame falling on sterling’s weakness. Business confidence was at a three-month high, but remained subdued compared to levels seen prior to last year’s Brexit vote, and once again the uncertainties stemming from the process to leave the EU got a mention as being a confidence-damping factor. The composite PMI worked out at 54.0 in August, fractionally down on the 54.1 reading seen in July, and consistent with Q2 GDP growth of 0.3% q/q.
Sterling dipped on the headline but recovered to trade little changed, EURGBP sank to 0.9178 before recovering to 0.9195, GBPUSD trades at 1.2920 and pivots off 1.2910.
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