United Kingdom flash Services PMI expands slower-than-expected to 51.7 in September

Sagar Dua FXStreet

The United Kingdom (UK) S&P Global Services Purchasing Managers' Index (PMI) expands at a moderate pace to 51.7 in September. The data was already anticipated to arrive lower at 52.0 from 52.5 in August.

Weak UK Services PMI led to a slowdown in the overall business activity. The Composite PMI dropped to 51.7 from 52.5 in August.

Meanwhile, the manufacturing sector activity remained strong. The Manufacturing PMI rises to 52.0 from the previous reading of 51.7. The data was expected to arrive lower at 51.4.

“September is seeing a worrying combination of disappointingly sluggish economic growth and intensifying inflationary pressures, with subdued business confidence and high costs meanwhile continuing to discourage hiring," Chris Williamson, Chief Business Economist at S&P Global Market Intelligence said.

Market reaction

There is a decent recovery in the British Pound (GBP) against the US Dollar (USD) after the data release. However, the rebound appears to be majorly driven by a slight correction in the US Dollar Index (DXY) from its fresh seven-week high of 100.86. Still, GBP/USD is down, trading 0.27% lower at around 1.3307.

Economic Indicator

S&P Global Services PMI

The Services Purchasing Managers Index (PMI), released on a monthly basis by S&P Global, is a leading indicator gauging business activity in the UK’s services sector. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), employment and inflation. The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the services economy is generally expanding, a bullish sign for the Pound Sterling (GBP). Meanwhile, a reading below 50 signals that activity among service providers is generally declining, which is seen as bearish for GBP.

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