As ever it pays to look below the headline on data releases 3 Nov
We were all a little surprised by the muted reaction to the decent headline figure to UK Oct services PMI especially given the sector's large (80%) contribution to UK GDP
By the same token though there is some devil in the detail that helps explain the lack of rally, apart from post-BOE sellers being poised and NFPs looming in less than 3 hours.
Here's a couple of points I highlighted/added in my post just now that give a more tempered/balanced view:
- rate of input cost inflation eased to its lowest since September 2016.
- the rate of job creation slipped to a seven-month low
Neither of these lend themselves to the thought of another rate hike anytime soon.
Here's the full report again for those who didn't follow it previously.
Chris Williamson, Chief Business Economist at IHS Markit also highlights the issues:
"The latest PMI survey brings mixed news on the economy. While an upturn in business activity growth adds some justification to the Bank of England's decision to hike interest rates for the first time in a decade, a deeper dive into the numbers highlights the fragility of the economy and points to downside risks for the outlook. "
So while I expect the headline help to underpin for the moment it is by no means the whole story.
GBPUSD holding gains at 1.3065 while EURGBP slips a little further to 0.8913
