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UK Preview: UK Services PMI likely to drop in December

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 6, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Mumbai) - The British services PMI will be released today at 09.30 GMT. The PMI is likely to drop to 55.6. The services PMI in November had come in at 55.9, the highest figure recorded in four months due to strength in new business. Services PMI had fallen sharply in October to 56.2. Services PMI in the UK reached an all-time high of 62.50 in October 2013 and a record low of 40.10 in November of 2008.

    Services growth in UK is concentrated on exports. The UK is the second largest exporter of services in the world after the US. Export-oriented service industries account for at least a third of UK’s overall GDP.

    A monthly guage of the UK service sector takes into account business outlook. Respondents include executives in transport and communications, financial intermediation, business services, personal services, computing and IT, hotels and restaurants.

    Purchasing managers have the responsibility of calculating future demand, and accordingly adjust orders for materials. The PMI data provides a summary of the opinions of the purchasing managers. A higher PMI figure stands for an increase in purchase of materials and thus indicates positive economic outlook. A lower PMI on the other hand stands for a fall in materials purchase and thus indicates a grim outlook. Analysts closely monitor the PMI figures as the views of purchase managers provide an insight into specific sectors. Their views are in tune with the latest economic and financial developments. The expectations of the purchase mangers give an indication of future economic trends.

    Like in other developed economies, growth in UK is being primarily driven by the expansion in the service sector. Manufacturing sector is seen showing steady signs of decline. Public administration and financial services have also contracted significantly in the past four years. Fortunately for UK, the negative impact of the fall in other sectors has been offset by strong growth in professional, business and support services and the health sector.
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