Was the services PMI survey conducted before the Brexit vote? At least according to the outcome, we don’t have a collapse which mimics the one in the construction sector. A score of 52.3 is slightly less than 52.7 originally expected, but certainly not a disaster. It remains in growth territory, above 50 points.
More: the comments accompanying the report are already more negative: Markit expects a further slowdown, possibly to contraction in the next few months as a result of Brexit. They also expect monetary stimulus.
GBP/USD is not thrilled, but neither is it devastated, currently trading at 1.3160. Update: GBP/USD now extends its falls and hits a new low 1.3135.
Another update: GBP/USD slips to 1.3113, the lowest since 1985 – worse than the previous low seen last Monday.
Markit’s purchasing managers’ index for the services sector was expected to slide from 53.5 in May to 52.7 in June. The manufacturing PMI came out as expected but was conducted mostly before the historic Brexit. However, the construction PMI was already terrible: at 46 points, it was the worst since 2009.
So, markets were probably expecting a fall to contraction. The services sector is the largest and most important one in the UK.
GBP/USD was trading lower, not only on business surveys but also on political uncertainty and worrying reports.