UK’s services PMI in December

According to a report by Markit Economics, the final UK services PMI (purchasing managers’ index) rose in December 2017 to 54.2 compared to 53.8 in November 2017. The PMI figure beat the market expectations of 54.1.

What Drove UK’s Services PMI in December 2017?

The improvement in the UK’s service activity in December was mainly driven by the improvement in economic activity and higher consumer spending. The December services PMI was the strongest reading since April 2017. Production output showed strong improvement during the month. However, new orders slowed due to weaker business investments. Job growth also weakened in that month.

Economic impact

Although consumer spending improved, Brexit concerns are still affecting consumers’ willingness to engage in higher spending. Input cost inflation is rising. However, the stronger improvement in economic activity is supporting investors’ sentiment.

Performance of index and ETF

The iShares MSCI United Kingdom ETF (EWU) rose 4.2% in December 2017. The broader market UK’s FTSE 100 Index (UKX-INDEX) rose 4.9% in the same month.

In the next part of this series, we’ll analyze the performance of Japan’s services PMI in December 2017.

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