UK September services PMI surprises modestly on the upside
Data released earlier on Wednesday showed UK service sector continued to recover from July’s EU referendum-induced shock. There was some slippage in the headline balance which eased to 52.6 from 52.9 in August. However, it was still better than the consensus expectation of 52.2.
Strong gains in the manufacturing and construction PMIs released last week had raised expectations for a similar reading in the services sector. Nevertheless, despite the headline slippage, the details of the September report are reassuring about the near-term outlook. The forward-looking business expectations component posted another rise to 66.4 from 65.9 in August. The pace of employment also picked up, with the balance rising to 51.7 in September from 50.8 in August.
“GDP growth in Q3 could be as strong as 0.5% q/q – if realised, that trend-like pace would be in line with the average since the start of 2015. Nevertheless, this does not rule out a resurgence of uncertainty in the months to come – with Article 50 triggering the process to depart the EU set to be activated by the end of March 2017 – which may again weigh on sentiment and activity,” said Lloyds Bank in a report.