The UK services sector rallied sharply in August suggesting an imminent recession will be evaded, data showed yesterday. The Markit/CIPS Purchasing Managers' Index (PMI) for the services sector jumped to 52.9 in August from July's seven-year low of 47.4, beating consensus forecasts of a reading of 50. The Pound soared to a seven-week high against the Dollar as a result of this data, following a collapse in the immediate aftershock of the Brexit vote. The rise was the biggest month-to-month jump in the survey’s 20-year history. This followed the biggest drop recorded the previous month, when businesses were coming to terms with the outcome of the referendum. However, economists are split as to whether this is a dead cat bounce, or an indication of a period of sustained confidence leading into the final months of the year.
In the early hours of the morning, the Reserve Bank of Australia released their interest rate figure. This was consistent with last month’s 1.5% reading, which fell from July’s 1.75% figure, Governor Stevens stated that ‘The global economy is continuing to grow, at a lower than average pace. Several advanced economies have recorded improved conditions over the past year, but conditions have become more difficult for a number of emerging market economies. Actions by Chinese policymakers have been supporting growth, but the underlying pace of China's growth appears to be moderating.’ He went on to say that ‘ In Australia, recent data suggests that overall growth is continuing, despite a very large decline in business investment, supported by growth in other areas of domestic demand and exports. Labour market indicators continue to be somewhat mixed, but suggest continued expansion in employment in the near term’.
Today, US ISM Non-Manufacturing PMI is released at 3:00pm, with an anticipated number of 55.4, down from last month’s 55.5 reading. This shows that the markets are expecting industry expansion to continue. At 5:15pm, the Swiss National Bank’s Governing Board Chairman, Thomas Jordan, will be delivering remarks at the Faculty of Economics in Lucerne. The head of the central bank’s comments will be scrutinized, as he may give an indication on their future monetary policy.