THE TAKEAWAY: UK PMI for Services (Oct) at 50.2 in November, worse than expected -> Lowest Services PMI in nearly 2-years -> Sterling trading unchanged
The rate of expansion in UK services activity has declined to a nearly 2-year low and showed little change, according to Markit’s Purchasing Managers’ Index. The services PMI for November was reported at 50.2, which was lower than the expected 51.0 index result and a drop from October’s 50.6 PMI. A PMI above 50.0 indicates expansion in sector activity.
Economic pressures were reported to undermine the securing of new business according to Markit. Levels of incoming new business fell for the first time since the end of 2010. However, employment grew for the first time in 3 months.
The UK economy returned to growth in Q3 due to one time factors like the Olympics and the previous quarter’s holiday, but Sterling investors are nervous of a slide back into economic contraction in Q4. Markit Chief Economist Chris Williamson said, ‘the survey adds to worrying signs that the economy faces a renewed slide back into contraction after the temporary growth surge seen in the third quarter.’
However, Sterling did not significantly react to the disappointing PMI in forex markets. GBPUSD is trading slightly above 1.6100, and resistance could be provided at the 2-month high of 1.6174.
GBPUSD Daily: December 5, 2012