New data revealed on Friday that the Flash UK Services PMI fell to the lowest reading since July 2016.
The GBP/USD fell below 1.29 following the gloomy PMI data.
The IHS Markit/CIPS Flash UK Services PMI Business Activity Index fell to 48.6 in November, indicating a modest reduction in service sector output.
The report said that service providers continued to link weaker demand to the delayed outcome of the nation’s departure from the European Union, and the consequential prevailing uncertainty.
Founder and CEO of REL Capital, Andy Scott, provided a comment: “Purchasing managers within the services sector are telling us that they are more pessimistic now than at any time since July 2016 and the recent decline in sentiment has been notable albeit not dramatic given that nine of the last twelve months have shown positivity in these numbers. It’s a similar tale with manufacturing.”
“As ever of late, it’s the political environment that is hurting us,” Andy Scott continued.
“Probably not a leave vs remain balance as such, but the fact that uncertainty prevails and now accentuated by the third general election in five years. Let us hope that one way or other the election result is decisive on December 12th. If not, we can expect more negativity as a consequence of continuing unwelcome uncertainty.”
Chris Williamson, Chief Business Economist at IHS Markit, also commented on the data: “With an upcoming general election adding to Brexit-related uncertainty about the outlook, it’s no surprise to see UK businesses reporting falling output and orders in November. The decline signalled by the flash PMI follows stagnation in October and adds to what has been the survey’s worst spell since the recession of 2008-9.”
“The weak survey data puts the economy on course for a 0.2% drop in GDP in the fourth quarter, and also pushes the PMI further into territory that would normally be associated with the Bank of England adding more stimulus to the economy,” the Chief Business Economist continued.