The flash composite output index was revised down 0.2 points to 47.5 in the final data for July. The new level was some 4.9 points below its June reading and the weakest outturn since March 2009.
The downward adjustment was attributable to a softer manufacturing sector (see Monday's PMI calendar entry) as the final services PMI (47.4) matched its flash mark. The updated figures confirmed the worst performance by services in more than seven years with new business also posting its first decline since the end of 2012. Job creation declined to zero, the first month not to see a rise in three and a half years, and backlogs fell more quickly than at any time since September 2009. Moreover, the year-ahead outlook for business activity also slumped to its worst level since February that year and more sharply than in any month during the survey's history.
Meantime, the slide in sterling saw input cost inflation pick up sharply but service provider charges still increased at the slowest rate in five months.
The final July PMI data reinforce the impression of an economy that has responded quickly to the Brexit vote. On paper today's report puts quarterly real GDP growth at about minus 0.4 percent. Other surveys have been rather less pessimistic but economic activity has clearly been impacted significantly by the decision to leave the EU. Financial markets will not be happy should the BoE MPC not deliver a sizeable easing package tomorrow.
The Markit/CIPS UK Services PMI covers transport & communication, financial intermediation, business services, personal services, computing & IT and hotels & restaurants.
Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the ISM non-manufacturing index in the U.S. and the Markit Services PMIs elsewhere, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.
The Markit PMI services data give a detailed look at the services sector, how busy it is and where things are headed. The indexes are widely used by businesses, governments and economic analysts in financial institutions to help better understand business conditions and guide corporate and investment strategy. In particular, central banks in many countries use the data to help make interest rate decisions. PMI surveys are the first indicators of economic conditions published each month and are therefore available well ahead of comparable data produced by government bodies.
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