UK Services PMI Plunges to 26 Months Low

UK services Purchasing Managers’ Index (PMI) plunges to 26 months low in August, marking it the weakest growth pace since April 2013.

The index dropped from 57.4 in July to 55.6 in August according to the report posted by Markit Economics on Thursday. However, readings above 50.0 level indicate growth or expansion of activity compared with the preceding month and below 50.0 shows activity contraction.

The data came out above 50 (55.6) which shows growth remained reasonably strong in the service industry, even as the Bank of England prepares to take a decision on interest rates next week.

“On a quarterly basis, data for July and August point to the slowest rate of growth since the second quarter of 2013. Business activity has nonetheless risen for 32 consecutive months, the second-longest sequence of growth since the survey started in July 1996” according to the report.

The total business received by UK businesses rose in August but slowed in July to the weakest since April 2013.  This slow rise in business is attributed to the size of incomplete work in the service sector last month.

The rate of job creation in the service sector has also picked up from the recent lows, though the second weakest since March 2014 considering the global economic outlook it’s a plus for the overall service sector except Hotels and Catering.

Therefore, overall business expectations remained strongly positive in August. Uk single currency, GBP, fell from 1.5346 price level to as low as 1.5232 against the US dollar as investors await Mario Draghi press conference in Europe and American investors await the result of the August trade balance and unemployment claims in the US.