UK Preliminary Services PMI drops to 52.5 in August vs. 52.0 expected

• UK Manufacturing PMI contracts to 46.0 in August, a big miss.
• Services PMI in the UK eases to 52.5 in August, beats estimates.
• GBP/USD turns south towards 1.1750 on dismal UK PMIs.

The seasonally adjusted S&P Global/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) unexpectedly contracts to 46.0 in August versus 51.1 expected and 52.1 – July’s final reading.

Meanwhile, the Preliminary UK Services Business Activity Index for August arrived at 52.5 when compared to July’s final score of 52.6 and 52.0 expected.

The first reading of the S&P Global/CIPS Composite PMI came in at 50.9 in August vs. 51.1 expected and 52.1 previous.

Annabel Fiddes, Economics Associate Director at S&P Global, commented on the survey

“The UK private sector moved closer to stagnation in August, as mild growth of activity across the service sector only just offset a deepening downturn at manufacturers. Waning customer demand amid the weaker economic outlook, and shortages of both staff and inputs, were reported to have hit goods producers hard, with firms registering the quickest drops in output and new work since May 2020.”

“Excluding the initial phase of the pandemic in early-2020, the reduction in manufacturing output was the quickest seen since the start of 2009. Meanwhile, the service sector registered the weakest increase in activity since the recovery began in early 2021.”

FX implications

A slump in the UK Manufacturing PMI checks the GBP/USD recovery. The spot is trading at 1.1763, almost unchnaged on the day.