From the UK, on Wednesday, Construction PMI figures were published. Adjusted for seasonal influences, the IHS Markit/CIPS UK Construction Purchasing Managers’ Index® (PMI®) dropped from 54.8 in June to 51.9 in July, to signal the weakest construction performance since August 2016. The latest reading was below the long-run survey average (54.5) and pointed to only a moderate pace of business activity growth.
Thursday was marked by UK Services PMI figures. The headline seasonally adjusted IHS Markit/CIPS Services PMI® Business Activity Index picked up to 53.8 in July, from 53.4 in June, to remain above the 50.0 no-change value for the twelfth month running. However, the latest reading signalled a slower rate of business activity growth than the post-crisis trend. Survey respondents noted that heightened economic uncertainty and fragile confidence among clients were key factors acting as a brake on growth.
However, the focus of the session was on BoE's interest rate decision and inflation report. The Bank of England voted 6-2 to keep rates steady. Haldane, who previously had indicated that it was a close call from him at the last meeting, stuck with the majority. The Bank of England returns to full staff at the September meeting. The BOE trimmed its growth forecasts but not its inflation forecast. This year's growth forecast was pared to 1.75% from 1.9%, and 2018 growth was shaved to 1.6% from 1.7%. It is important to note that the composition of growth is seen changing.
This week markets will be looking at:
Industrial Production (Thursday 10:30)
