The UK Pound Sinks on Weak Private Sector PMI Numbers for May
It was a relatively busy start to the day for the UK market. Private sector PMI figures for May drew market interest this morning.
Last week, better than expected retail sales and employment figures delivered strong Pound support. Today’s numbers, however, left the Pound in the deep red, with weak service sector activity reigniting fears of a UK recession.
Prelim Private Sector PMIs Sink the Pound
In May, the manufacturing PMI fell from 55.8 to 54.6, with the services PMI sinking from 58.9 to a 15-month low of 51.8. Economists forecast PMIs of 54.9 and 56.9, respectively.
As a result of the sharp fall in the services PMI, the composite PMI slid from 58.2 to a 15-month low of 51.8. Economists forecast a fall to 56.5.
According to the prelim May survey,
- Surging inflationary pressures and heightened geopolitical risk weighed on customer demand.
- At the composite level, the 6.4 index point slide was the fourth-largest on record.
- Service providers recorded the greatest loss of momentum, impacted by economic and geopolitical uncertainty.
- Manufacturers saw production volumes rise at the joint-weakest since Oct-2021.
- Goods producers attributed the weaker numbers to supply chain disruption, the war in Ukraine, and inflation.
- Across the private sector, new order growth slowed for the third consecutive month.
- Manufacturers reported the steepest fall in export orders since June 2020.
- Average cost burdens surged, with input price inflation hitting a survey record.
- Prices charged inflation softened, however, due to weaker customer demand.
- Business expectations slipped to the lowest level in two years and the decline was most significant in the services sector.
Ahead of today’s PMI figures, the Pound rose to a pre-stat and a current-day high of $1.25986.
In response to the numbers, the Pound tumbled to a post-stat and a current-day low of $1.24810.
At the time of writing, the Pound was down 0.84% to $1.24817.