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Inflationary Pressures From Flash Release Confirmed In Feb Final PMI


The UK services PMI was revised -0.5 points lower vs the flash release at 53.8 (vs 54.3 flash). However, the index remains above levels seen in H2 2023 and has printed above 50 for the last 4 months.

  • The key message appears similar to the flash release though: Labour costs continue to put upward pressure on prices, much like in the Eurozone.
  • BoE-dated OIS continue to shows ~60bp of ’24 cuts, while Gilts also saw a limited reaction.

Key notes from the release:

  • "Higher levels of business activity were supported by a solid increase in new order volumes during February".
  • "Some firms also cited the prospect of lower interest rates as a factor driving a turnaround in customer demand".
  • "Strong cost pressures persisted across the service economy. Overall input price inflation accelerated to its highest since September 2023, primarily driven by higher wage bills".
  • "A number of firms also reported increased costs due to shipping surcharges".
  • "Anecdotal evidence suggested that resilient customer demand had allowed firms to pass on higher business expenses, with many citing upward pressures from rising wages".

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