UK service sector hits 2 year high
The UK service sector continued the run of expectation beating data in June adding to signs the economy will enjoy stronger growth in Q2. The Services PMI jumped by 2 points to 56.9 in June, the highest since March 2011. The improvement was driven by the business expectations component which rose 0.9 points to 69.3 while the new business component rose to the highest level since mid-2007. This latest positive UK release makes further monetary policy loosening even less likely in the BoE announcement later today.
The Eurozone service sector enjoyed more modest growth as the index rose from 47.2 to 48.3 in June. At a country level, business activity expanded in both Germany and Ireland while the pace of contraction eased in Spain and France. However, further deterioration was reported for Italy which saw the sharpest decline for three months.
By contrast, the US service sector fared less well as growth slowed in June. The ISM nonmanufacturing index fell to 52.5 in June, down from 53.7 in the previous month. While still pointing to expansion, this is the lowest reading since early 2010 and fell considerably short of market forecasts of a rise to 54.0.
Sterling recovered some lost ground against the US dollar as it bounced over 1.5 cents to a high of $1.5302 while GBP/EUR gained over 1 cent to €1.1789.