Yesterday’s slew of PMI data sets painted a fairly dim picture of recent economic performance in the US and UK alike. On the back of the bumper gain and solid trajectory seen over the second half of last year and the first quarter of this year, these indicators have lost a great deal of momentum over recent months. Given the difficulty the market is having on grasping a directional view, given the uncertainty caused by rising Delta variant rates, yesterday’s data serves only to accent this difficulty, offering a picture of slowing activity across these two economies.
US Services PMI Slows
In the US, the IHS flash August services PMI slowed to 55.2, down from the prior 59.1 and well below the 59.9 expected. Indeed, the indicator is now trending heavily lower from the highs registered above 70 at the start of Q2. At this point, the US service sector is sitting at an eight-month low, following its third consecutive monthly decline.
US Manufacturing PMI Undershoots
On the manufacturing front, the picture remains a little more encouraging though still highlights weakness. The HIS flash August manufacturing PMI was seen slowing to 61.2 from the prior month’s 63.4 and well below the expected 62.4 reading. The indicator is now sitting at 4 month lows. Notably, the surveyed results highlights the greatest difficulty in finding new workforce member so far this year.
UK Services PMI Misses Mark
In the UK, it was a similar story for the services sector with the August flash PMI falling to 55.5 from the prior month’s 59.6, well below the 59 level expected. This reading marks the slowest level of growth in the services sector since February, reflecting the weaker demand conditions reported by business recently. As with the US, this marked the third straight month of declines in the reading.
UK Manufacturing Beats Expectations
On the manufacturing front, however, the outlook remains more positive. UK flash manufacturing for August came in at 60.1. While down slightly from the prior 60.4, it was higher than the expected 59, 5 reading the market was looking for. Within the reading, business expectations marked a three month high offering some positive signs looking ahead.
Technical Views
GBPUSD
Following the latest downside break of the rising trend line from Q1 2021 lows, GBPUSD has continue to find support on approach to the 1.3570 level. This areas remains a key price pivot and while above here, there is room for a longer term continuation higher. However, indicators remain tilted lower here and if we do see a downside break, 1.3461 will be the next downside marker to note.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.