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Free AccessU.S. Macro Signal - Sept 2024: Rebalancing Act Spurs Fed Cuts
U.S. Macro Signal - Sept 2024: Rebalancing Act Spurs Fed Cuts
MNI: UK Services Sector Activity Hits Three Month Low in July
--IHS Markit/CIPS UK Services PMI 53.5 in July vs 55.1 in June
By Jamie Satchi
LONDON (MNI) - UK services sector activity slipped to a three-month low in
July, making for a disappointing start to the third quarter, with both business
activity and new orders receding on the month, data from IHS Markit/CIPS
released Friday showed.
The UK Services Purchasing Managers' Index (PMI) fell to 53.5 in July from
55.1 in June, below the MNI median estimate which envisaged a more moderate fall
to 54.6.
Despite the slip, the July result marked the 24rd successive month that the
headline index has sat above the 50-mark delineating expansion and contraction.
--MIXED FORCES AT PLAY
Culpable for the easing in the headline index was a moderation in both
business activity and incoming new work, both expanding at softer rates versus
their respective June level.
According to the IHS Markit/CIPS report, activity was both aided and
blighted by the month's somewhat unique set of factors and events.
While some firms noted that the unusually dry summer had a positive impact
on their sales, specifically those operating in tourism-related industries,
others cited that the hot weather and football World Cup had caused disruption
to business operations or had weighed on customer footfall.
Alongside these more temporary factors, some survey respondents noted that
"delayed decision-making and greater risk aversion among clients in response to
Brexit uncertainty had held back new business growth" during the month.
--HIRING INTENTIONS DOWN
Employment growth eased to its weakest level since August 2016, with slower
job creation and matching rates attributed to a range of outcomes - a tight
labour market while some service sector firms relayed long-term intentions to
"automate business processes and maintain service levels with lower headcounts".
One upside of firm's recruiting hardship was that there were signs it was
delivering productivity gains.
"Survey respondents are increasingly citing worries about the availability
of suitably skilled candidates to fill vacancies, although this is also helping
drive efforts to boost productivity across the service sector," said Chris
Williamson, Chief Business Economist at IHS Markit
--PRICES REMAIN HIGH
Despite easing from June's nine-month high price pressures remained
elevated across the sector. Some firms noted that intense competition for new
work had restricted their ability to pass on higher costs to clients.
--BOE GUIDANCE REAFFIRMED
"The service sector moved back into the slow lane in July as business
activity growth lost momentum for the first time since the start of spring,"
Williamson said.
"The combination of slower output growth and softer price pressures during
July will reinforce expectations that any further Bank of England rate rises
will be both gradual and limited," he added.
--Q3 PICTURE MIXED
Friday's survey completes the month's trio of activity sentiment indictors
following the release of the manufacturing and construction PMIs published
earlier in the week, both of which experienced different fortunes.
The manufacturing PMI settled at 54.0, a three month-low, while the
respective construction index rose sharply to 55.8in July, signalling the
highest rise in output in 14 months.
While all three measures remain firmly above the neutral-mark, the sharp
decline in the services measure may generate some anxiety after the Bank of
England adjudged the economy to have found its feet in recent months after a
weather-hit Q1.
Still, with July subject to more than one one-off factor there is every
chance the PMI could head back towards June's level in August.
--MNI London Bureau; +44 203-586-2226; email: jamie.satchithanantham@marketnews.com
--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com
[TOPICS: MABDS$,M$B$$$,M$E$$$,MT$$$$]
To read the full story
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Please enter your details below.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.