United Kingdom’s services PMI in May
According to a report by Markit Economics, the final United Kingdom services PMI (purchasing managers’ index) was 53.8 in May 2017—compared to 55.8 in April. The PMI figure was also below the market’s expectations of 55.
Weaker improvement in the United Kingdom’s services PMI was mainly due to slower improvement in new business orders, domestic demand, and export orders in May 2017. Before uncertainty about the United Kingdom’s election (EWU), consumer demand was lower in May. Consumer household budgets were also lower in May 2017.
Lower contribution of services
In our previous series, we saw that the United Kingdom’s (EWU) economic growth was 0.3% in 1Q17. However, the figure didn’t beat the market’s expectation of 0.4% growth. The service sector contributed less to the GDP in 1Q17. In previous quarters, the service sector contributed to most of the GDP.
The current environment in the United Kingdom indicates a hung political environment. To improve its business environment, the country needs a stable political environment. Many leading financial services companies such as Barclays (BCS), HSBC (HSBC), and the Royal Bank of Scotland (RBS) are operating in the United Kingdom. A stable political environment will bring more investment to the United Kingdom. However, the economy is still concerned about Britain’s exit from the Eurozone (EZU) (IEV) (HEDJ) (VGK), which could impact the economy’s performance.
In the next part of this series, we’ll analyze Japan’s services PMI in May 2017.