Sterling enjoyed a positive day on Thursday, boosted by Purchasing Managers Index (PMI) data that was broadly more positive in the UK than in the eurozone.
Overall, GBP approaches the end of a busy week around 0.75% stronger against the euro than at the start of the week, and over 1.3% higher against the US dollar.
Yesterday’s data highlights were the ‘flash’ reading for Services and Manufacturing PMI, which were 50.5 and 46.7 respectively. Both were higher than expected, and services, which are the more important reading for the health of the UK economy was back in positive (i.e. optimistic) territory over 50 for the first time since July. German, French and eurozone PMI was still generally well down in the 40s.
However, before the champagne corks start popping, S&P Global Insight did point out that the UK economy is essentially flatlining: “The survey’s forward-looking indicators suggested that recession risks will likely remain elevated into the New Year, as new orders decreased for the fifth month running amid ongoing reports of subdued sales opportunities,” said economic director, Tim Moore.
There appear to have been no negative ramifications from the tax-cutting Autumn Statement on Wednesday.
We have just had a reading for GfK Consumer Confidence in the UK for November, which rose to -24 from -30 in October. This exceeded market expectations of -28 and showed consumer mood improved.
Germany’s GDP for Q3 was just confirmed to have contracted by 0.1%, reversing the 0.1% growth seen in the previous three months. Later this morning there will be more insight into the German economy, with the Ifo Business Climate report.
One positive for the UK economy, if a headache for the government, was an uprating in the net migration numbers, to 745,000 in 2022. While there were big complaints from some quarters about the numbers, the Office for National Statistics (ONS) pointed out that more than 30% were students and their dependents and many more were EU citizens coming back to work in the UK post-pandemic. New arrivals coming to work, and their dependents made up 36%.
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