UK Preliminary Services PMI steadies at 53.4 in June vs. 53.0 expected

• UK Manufacturing PMI drops to 53.4 in June, misses estimates.
• Services PMI in the UK comes in at 53.4 in June, a positive surprise
• GBP/USD briefly rebounds to 1.2200 on mixed UK Preliminary PMIs.

The seasonally adjusted S&P Global/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) dropped to 53.4 in June versus 53.7 expected and 54.6 – May’s final reading.

Meanwhile, the Preliminary UK Services Business Activity Index for June arrived at 53.4 when compared to May’s final score of 53.4 and 53.0 expected.

Chris Williamson, Chief Business Economist at S&P Global, commented on the survey

“The economy is starting to look like it is running on empty. Current business growth is being supported by orders placed in prior months as companies report a near-stalling of demand. Manufacturers, in particular, are struggling with falling orders, especially for exports, and the service sector is already seeing signs of the recent growth spurt from pent-up pandemic demand move into reverse amid the rising cost of living.”

“Business confidence has now slumped to a level which has in the past typically signaled an imminent recession. The weakness of the broad flow of economic data so far in the second quarter points to a drop in GDP which the forward-looking PMI numbers suggest will gather momentum in the third quarter.”

FX implications

Positive surprise on the Services PMIs allowed the GBP/USD pair to briefly rebound to 1.2200 in a knee-jerk reaction.

The spot was last seen trading at 1.2183, down 0.69% on a daily basis.