UK services sector enjoys reopening boost
|The UK reopening in mid-July has helped drive an upward revision for the services PMI, lifting the pound in the process. Meanwhile, a collapse in the ADP payrolls reading does raise questions over bullish predications for Friday’s payroll release.
- US markets lag after disappointing ADP figure
- European services PMI revised lower
- UK services sector shows strong reopening rebound
European markets are on the rise in a somewhat volatile day for financial markets. With Friday’s jobs report coming into view, we have seen a raft of economic data points released to provide us with a fresh update on the ongoing recovery. Certainly today has provided mixed signals over how the headline payrolls figure will move, with a sharp decline in the ADP payrolls figure counteracted by rising employment expansion within both the manufacturing and services ISM PMI surveys. However, with the ADP falling sharply lower, we have seen treasury yields decline which has ensured outperformance for the Nasdaq. From a mainland European perspective, disappointment across the board saw downward revisions across eurozone services PMI surveys. Meanwhile, the latest retail sales figure also fell short of expectations.
Despite some unwelcome data out of the eurozone and US, the UK has enjoyed a relatively upbeat day after a strong upward revision to the services PMI. The UK’s reliance upon the hard-hit services sector saw the country experience one of the biggest downturns of any developed nation. However, with the UK reopening bringing an uptick in demand for the services sector, it is likely that we will also see growth receive a boost as we go forward. From a market perspective, the outperformance of UK services has provided a lift for the pound, with EURGBP heading lower over the session. That sterling strength does undermine the FTSE 100 pricing, with the main UK index falling short of mainland European gains. After all, the weakness we have seen across eurozone and US data does take some of the heat off the likes of the ECB and Fed and they consider taper timelines.
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