The UK Early Services Purchasing Managers’ Index (PMI) experienced a sharp spike in April, hitting 54.9, up from 53.1 back in March and outdoing the forecasted 53.0. This broad increase in the business activity of the UK service sector marks a robust growth, with indicators attributing it to the easing of Covid-19 norms and a subsequent surge in customer demand.
Interestingly, this is the quickest rise in output since August 2020 and significantly surpasses the long-run average. Sadly, the situation in the Manufacturing PMI was less than ideal, with values dipping from 50.3 in March to 48.7 in April – a far cry from the predicted 50.3 and signalling a downturn in industrial activity.
The decrease is a potential cause for concern regarding the future traction of the manufacturing industry. Despite this, the surge in the Services PMI compensates for the reported decline in the Manufacturing PMI. A clear demonstration of the balance in the UK economy, the realignment suggests a plausible shift in economic strategy towards service-oriented sectors.
Principal Business Economist at S&P Global Market Intelligence, Chris Williamson, points to the rapid growth in the service sector as the key driver behind the UK’s swift bounce-back from last year’s economic setback.
UK service sector exceeds predictions
Williamson goes on record to say that this growth could potentially contribute to a 0.4% quarterly GDP increase, highlighting the crucial role of the service sector in the resilience and stability of the UK’s economy.
In spite of varying PMI data, the British pound is holding strong, particularly against the New Zealand Dollar. The buoyancy of the pound is largely driven by market sentiment, which is on the rise due to the easing of Covid-19 measures. Although Brexit uncertainties do casts a shadow, the outlook remains hopeful, especially when pitted against weaker currencies.
Simultaneously, the Euro is gathering momentum amid the anticipation of US PMI reports, while gold faces major selling pressure. Ongoing market observation will shed light on unfolding scenarios, providing crucial insights for investors and stakeholders.
