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UK Services PMI Recovers Strongly

James Boston
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UK Services PMI Recovers Strongly

The UK’s Purchasing Managers Index (PMI) for the Services Sector appears to have rebounded according to the latest figures from Markit Economics and CIPS. This rebound takes the indicator back to it’s medium term average levels which make last month’s large and unexpected fall look more like an anomaly than anything more fundamental. The latest PMI reading for the month of November has been reported as 58.6, this follows the October reading of 56.2 and the recovery appears to have somewhat surprised analysts that had been forecasting a reading of just 56.5.

The UK’s Construction PMI indicator did not fare as well as Services one did today. Although at a somewhat higher base, the Construction PMI today fell to it’s lowest level of the past 12 months, at a reading of 59.4 the PMI is clearly showing some softness compared to the 61.4 reading taken in October. The UK’s construction sector is considered to be in a healthy condition however sentiment is lower coming to the year end as the awarding of government contracts tends to wind down until the new budgetary cycle begins in January. Despite the fall in the Construction PMI, the indicator is still well into expansionary territory (above 50) and remains above it’s long term average of 54.5.

Credit statistics released this morning however are showing a slight slowing in property related financing. The October Mortgage Approval number for the UK has fallen to 59.4k from a September reading of 61.2k, this fall however was not as large as the anticipated drop to 59.0k. The UK’s Net Lending Secured On Dwellings number has also been reported as falling significantly during the month of October, the latest reading is showing this net change in residential mortgages to be £1.5Bn compared to £1.7Bn in June, analysts had in fact anticipated a rise to £1.8Bn in the latest figures.

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