UK Preliminary Services PMI returns to expansion, with 53.3 in February

• UK Manufacturing PMI improves to 49.2 in February, a big beat.
• Services PMI in the UK comes in at 53.3 in February, a positive surprise.
• GBP/USD jumps to test daily highs near 1.2075 on encouraging UK PMIs.

The seasonally adjusted S&P Global/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) unexpectedly improved to 49.2 in February versus 46.8 expected and, January’s 47.0 final readout.

Meanwhile, the Preliminary UK Services Business Activity Index for February jumped to 53.3  as against January’s 48.7 final print and 48.3 expected.

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

“Much better than anticipated PMI data for February indicate encouraging resilience of the economy in the face of headwinds which include rising interest rates, the ongoing cost of living crisis, labor shortages and strikes.”

“While many companies continue to report tough operating conditions, especially in the manufacturing sector, the broader business mood has been buoyed by signs of inflation peaking, supply chains improving and recession risks easing. The stress created by last autumn's mini-budget is also continuing to work its way out of the financial system.”

FX implications

The unexpected improvement in the UK Manufacturing and Services PMI has a positive impact on the GBP/USD pair. The spot is adding 0.29% on the day to trade at daily highs near 1.2075.