Uk Services Pmi Jumped In December

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Uk Services Pmi Jumped In December

UK Services PMI Jumped In December, Interest Rate Remains High

The UK companies from the services sector showed positive growth in December. As a result, the chances of the UK economy avoiding a recession have increased. At the same time, the Bank of England (BoE) has left comments which show that interest rates will not be lowered.

After the release of the PMI reading, the sterling pound jumped higher against the US dollar. In addition, the talks from BoE officials about no rate cuts also helped the GBP.

UK PMI Jumped To 51.7 In December

The UK PMI, which tracks the manufacturing & services sector, jumped from 50.7 in November to 51.7 in December. Overall, the reading of December is the highest in over 6 months and shows that the economy is indeed growing.

Although the reading for December was 51.7, the economists had only made a forecast of 50.9. This means that the actual reading was +0.6 higher than the market's forecast.

The UK PMI reading was higher than the forecast, which came out to be a pleasant surprise given the PMI reading for the Eurozone. If we look at the EU side, the recent PMI reading has actually signaled that the recession in the EU is around the corner.

The bigger picture is that the UK economy has managed to avoid recession. At the same time, the economic growth has picked pace, which shows that the Q4 results will likely be better.

One particular detail that is hidden in the UK PMI reading for December is the difference between the services & manufacturing sectors. The UK's manufacturing sector has actually contracted while the services sector posted some good growth.

A few days ago, the Bank of England (BoE) made it clear that the interest rate needs to be maintained in order to avoid inflation risks. Despite these comments from the BoE, the markets still believe in rate cuts.

If we look at the readings of the manufacturing sector, it showed a decline and touched 46.4. Overall, that's the 17th month in a row of consistent contraction.

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