U.K. services PMI index rises in February

The U.K. services PMI rebounded in the month of February. The headline index rose to 54.5 from January’s 16-month low of 53, surpassing market projection of 53.3. Apart from the headline rise, the details of the services report also had positive news. The flow of new business orders rose to 55.1, whereas a measure of outstanding work augurs well for the outlook for activity in months ahead, noted Lloyds Bank in a research report. Accordingly, companies reacted to this improved backdrop by seeking to stimulate operating capacity through increased headcount. The rate of job creation rose at its most rapid rate in five months.

But, several service sector companies highlighted Brexit-related uncertainty as being a key influence behind clients’ reduced appetite to spend. Therefore, long-term expectations pared back a little in February. Still, with stronger global economic conditions providing tailwinds, the business expectations index stayed above the average recorded in the second half of 2017. The rate of cost rises moderated in the latest report as exchange-rate driven input costs indicated some signs of stabilizing, which countered the effect of higher salary settlements.

In spite of the fall in the manufacturing PMI for February, the rise seen today signifies that the composite PMI rose in February to 54.5 from 53.5 in January, stated Lloyds Bank.

“Taken together with our own Business Barometer, around these levels, the PMIs point to quarterly GDP growth of around 0.4 percent”, added Lloyds Bank.

At 13:00 GMT the FxWirePro's Hourly Strength Index of British Pound was neutral at 6.80357, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -7.23119. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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