UK Service Sector in Trouble
The latest set of PMI readings for the eurozone and the UK today highlighted some clear divergence with regards to economic performance between the two. In the eurozone, the services sector was seen moving back into positive territory last month, printing 50.7, up from 47.8 in November. This marked a strong increase and was above market forecasts for a 50 reading. However, in the UK, the services sector was seen falling further into contractionary territory at 48 from 49.9 previous, well below the 49.6 the market was looking for.
Factory Sector Slightly Better
Factory sector readings were similar. While in the UK there was a small improvement, at 46,7 from 45.3 prior the sector was still in negative growth territory last month. In the eurozone, the factory sector remained in negative territory also though at 48.8, up from 47.8 prior, was a little stronger than in the UK.
Much has been made of the UK’s post-Brexit struggle and these latest business survey results show that these difficulties have not yet passed. While the BOE governor recently offered reassurance that the UK economy had turned a corner, there is still plenty of downside risk for the UK as Brexit, difficulties, covid disruption and ongoing industrial action continue to thwart many business sectors at a time when rates and inflation are both still elevated.
The latest test of .8869 saw the pair turning lower again. However, with the correction subsequently finding support at the .8719 level, price is now moving higher once more. For now, while price holds above the bullish trend line the focus is on a continuation higher and a break of the .8869 level opening the way for a move back up through last year’s highs.