UK’s June PMI’s signal a rebound in the economy

Posted on
london pmi forex

The monthly PMI figures for the month of June signaled that the UK’s economy was poised for a rebound. Data from Markit/CIPS indicated a mixed report, but the overall factor was that business conditions were improving.

Following the release of the PMI’s, Markit forecasts that the UK’s economy might have averaged around 0.4% in the three months ending June 2018. This would mark a modest recovery following a revised first quarter GDP which increased 0.2% in the three months ending March 2018.

Does your trading knowledge measure up? Check out our Learn Forex Basics!

Manufacturing activity remains subdued

Growth in the manufacturing sector was seen rising at subdued pace for the month of June. The data showed that the manufacturing PMI index rose to 54.4 in June. This was a slightly modest uptick compared to the revised PMI index reading of 54.3 in May.

The median estimates pointed to an increase to 54.2.

The data for June was seen below the 51-month high that the index reached in November last year. Still, with the manufacturing activity above the 50-level on the index, it signaled expansion in the sector.

Growth in the manufacturing sector was seen to be moderate as it offset a modest increase in the pace of new orders. Job creation in the manufacturing sector was also seen gaining a boost.

The manufacturing report was nothing much to cheer home about and with the sector seen to have stagnated, an possible increase in the GDP growth during the second quarter is expected to be lifted by increased activity in the other sectors.

Have you got the hang of applying fundamental analysis? Check out our guide!

UK Construction PMI rises to a 7-month high

In contrast to the manufacturing sector, the construction activity showed a strong pace of gains. Data from IHS Markit showed that construction output was seen rising at the fastest pace in seven months.

The construction PMI was seen rising to 53.1 in the month of June. This was a stronger pace of increase compared to 52.5 that was registered in May. The data showed that this was the biggest monthly increase in the PMI since November last year.

Data showed that residential work remained the strongest across other sub sectors. Commercial building activity was seen coming in at a close sector which managed to contribute to a higher pace in the construction output. Civil engineering activity was seen rising at a subdued pace during the month.

Growth of new orders in the construction sector was seen rising at the fastest pace, levels of such were last witnessed in May 2017. The higher level in the growth of new orders also helped to push the employment figures higher in the construction sector.

Firms in the sector reported that there was a rebound in optimism among business following a decline to a seven month low in the month of May.

Still, despite the uptick, there is a broader sense of uncertainty given the volatility in the sector. Further to this, the recent less than average confidence in the business is also said to cloud the outlook.

Did you know that our average spread on the GBPUSD is below 1 pip? Check out our spreads on a demo account now!  

UK Services sector rises to an eight month high

Activity in the services sector was impressive as the sector expanded at the fastest pace in eight months. The gains came on new work orders which pushed the services PMI to 55.1 in June. This was higher than May’s reading of 54.0.

Economists polled forecast no change to the PMI for June. With an above 50 level in the index, the data showed expansion in the services activity.

The uptrend for client demand in the business and financial services helped to boost consumer spending. The services PMI data added to the signs that the UK’s economy might have been recovering in the second quarter following a 0.2% increase in the first quarter.

New work was seen increasing at the fastest pace in a year with new product launches amid improving economic conditions. However, business investment was seen to be modest due to the uncertainty on the Brexit issue.

Employment in the services sector was seen rising moderately but the pace of job creation remained near a 13-month low.

DemoAccount

(Visited 1 times, 2 visits today)

John has over 8 years of experience specializing in the currency markets, tracking the macroeconomic and geopolitical developments shaping the financial markets. John applies a mix of fundamental and technical analysis and has a special interest in inter-market analysis and global politics.

Follow Me:
Twitter