THE TAKEAWAY: UK PMI services reported at 51.0 in June, lower than expected -> Economy, weather and Olympics blamed for slowdown -> Sterling corrects higher
The UK PMI for services indicated the sector had its slowest expansion in 19 months in July, as the index came in at 51.0 and 0.6 lower than expectations. June’s PMI for services was 51.3, according to Markit’s release. Any PMI above 50.0 indicates expansion.
Markit cited poor weather and Olympics related disruption, combined with poor economic environment, as the reasons for the slowdown in expansion. An increase of employment in the services sector was recorded for the eighth straight month in July; business sentiment also remained positive.
The combined PMI for construction, manufacturing, and services indicated a total contraction among the industries in July, and Markit Senior Economist Paul Smith said, ‘the latest data further highlight the loss of momentum in the UK economy following the relatively bright start to the year.’
The UK PMI did not seem to have a significant effect on British Pound trading against the US Dollar, however the pair has corrected nearly 50 points higher following yesterday’s decline below 1.5500. Resistance could come in around the psychological 1.5600 level.
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