Weak Signals are a Warning for the Economy

Following on from poor construction data, weaker than expected services sector data is just one more warning signal for the UK economy. Growth in the services sector slowed in August, according to the latest PMI survey, showing a weaker than expected performance.

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shareprices.com - Tuesday, September 05, 2017

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Disappointing services figures were just one more waning sign for the health of the UK economy, while services figures across Europe were lower than economist forecasts, and the pound retreated to be flat against the dollar.

The FTSE 100 rebounded into positive territory, as investors digested the true risk factors relating to North Korea’s missile testing and the political tension in the region, and risk appetite on the markets slowly started to return.

Locally, Barratt Developments is leading the pack this morning, in anticipation of its results which are due later this week. Rival Redrow reported record figures this week, and has upgraded its guidance.

The services sector is showing slowing growth, down to 53.2 according to the PMI. Figures above 50 indicate growth, while figures below 50 indicate contraction. In isolation, the 53.2 figure is not cause for concern, but latest trends suggest that 52 is the tipping point for an industry that is entering recession, and the services sector is just one of many that appears to be struggling at time.

In other news, the pound is flat against the dollar, after having a week start this morning as investors started the day in a relatively pessimistic mood.

 

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