The tertiary sector is dominating headlines today, as we have services PMI, from not only the UK but also the world’s largest economy; the US. Firstly, UK services disappointed, missing expectations of 56.4 and posting its slowest reading in over 2 years at 53.3. It seems that the slowdown in China and emerging markets are not only effecting the UK’s secondary sector (we saw manufacturing miss expectations last week) but also the UK’s biggest sector, which in-turn are bolstering the BoE’s decision to keep rates at record lows this week.
Across the pond, the ISM non-manufacturing PMI was released, expectations were lower than last month at 58.0 and after Friday’s poor labour data the ISM was highly keen to see if this pattern continued, which it did with ISM non-manufacturing posting a 56.9. The overall index fell for the second consecutive month but primarily due to July’s unsustainable rise. However, the survey also shows a strengthening in the jobs market, with the employment index rising to 58.3 from 56 which could mean that we will see a re-acceleration in payroll growth over the next few months.
A relatively quiet day today as the Economic and Financial Affairs Council (ECOFIN) meeting kicks off in Brussels. Given the economic backdrop and the fall out of the latest VW scandal it is likely there will be a host of economic related topics on the agenda. German factory orders will be hitting the wires before the UK opens but the main focus will be on ECB President Mario Draghi who is speaking in Frankfurt. In the US, the trade balance is set for release.