We had a raft of high tier data released yesterday from both the UK and US. Firstly, the UK’s biggest sector released its PMI index yesterday morning. The third and final PMI figure was posted this week after a decent Manufacturing figure on Monday and poor Construction number released on Wednesday. However, the Service PMI figure is the markets main focus as the tertiary sector accounts for roughly 80% of UK growth. Services PMI registered a slightly better than expected 55.6 against a 55.4, its best reading this year.
Across the pond, ADP Non-farm Employment change exceeded economists’ consensus registering a 205k. The correlation between the two has been relatively accurate recently, the ADP has successfully predicted the direction correctly for the last three months, suggesting Friday’s all important Non-farm figure could once again post north of 200k and exceed expectations. Shortly after, US ISM Non-manufacturing PMI descended to a 22 month low of 53.5. It was its third consecutive month of deceleration in the US’s largest sector.
The key event for the UK today is the BOE inflation report. This report includes the BOE's projection for inflation and economic growth over the next two years. A press conference is held afterward which could give some key insight. With question marks continuing to loom over the timing of the first rate hike in the UK, it will be monitored closely for key signals on when this could happen. Throughout 2015 we saw the picture continuously changing from both the US and UK, could this be repeated?