The S&P Global’s August PMI reports reflected solid expansions of the U.K.’s private sector activity, with the manufacturing sector jumping to a 26-month high while the services sector rising to a four-month high.
The composite index measuring both the manufacturing and services sectors was also under the spotlight as it hit its highest levels since April:
- Manufacturing PMI rose from 52.1 to 52.5
- Services PMI improved from 52.5 to 53.3
- Composite PMI jumped from 52.8 to 53.4
According to the report, “rising business activity and resilient demand conditions contributed to a greater uplift in staff hiring, with the rate of employment growth the fastest since June 2023.” Firms also continued to pass on higher input costs by raising prices charged, though the latest price increases were “among the slowest seen since the start of 2021.”
Link to S&P Global U.K. August PMI reports
The report detailed,
“August is witnessing a welcome combination of stronger economic growth, improved job creation and lower inflation…
…The latest survey data therefore help lower the bar for further interest rate cuts, although the still-elevated nature of inflation in the service sector suggests that policymakers will move cautiously.”
Market Reaction
British Pound vs. Major Currencies: 5-min
The broad strengths seen in August’s private sector activity decreased the odds of an aggressive easing monetary policy path from the Bank of England (BOE).
Not surprisingly, the British pound traded higher against its major counterparts. Sterling even hit new intraday highs by the U.S. session open and maintained its gains except against the U.S. dollar and the Swiss franc.