UK Services PMI has risen by the 5.5 points to 52.9, the biggest ever jump in the survey’s 20 year history.
The rise is a sharp bounce back from the 47.4 reading taken in July in the immediate aftermath of the EU referendum.
The pound jumped almost a cent against the dollar on the back of the news.
Laith Khalaf, Senior Analyst at Hargreaves Lansdown comments:
‘The service sector is the engine room of the UK economy, so a return to form represents a welcome vote of confidence in the country’s financial prospects. With parliament now back from summer holidays, the serious business of negotiating withdrawal from the EU begins in earnest. Brexit is going to be a lengthy process, with plenty of ups and downs along the way, so economically speaking it’s still way too early to start counting any chickens just yet.
It’s also worth bearing in mind that dramatic bounce-backs are often a reflection of the depths of previous despair, rather than of optimism over the future. In terms of services output, today’s reading is simply in line with survey results earlier in the year, and it is last month’s sharply negative reading which is the outlier.
Since the referendum economic indicators have by and large held up pretty well, and if the positive mood music continues that should put a spring in the step of the pound on the currency markets. More robust economic data would also make the central bank think twice about any further loosening of monetary policy, and may also play its part in determining the future of austerity, as we approach the new chancellor’s Autumn Statement later on in the year.’
(Source: Hargreaves Lansdown)