020 7898 0500Yesterday’s sterling (GBP, pound) price movement was minimal as positive data was countered by a cautious tone from retailers.
Data from the Purchasing Managers Index (PMI) for the Construction sector was bullish. The index read 54.2 in December, up from 52.8 the month before. A figure above 50 indicates expansion; therefore the pace of expansion in December was faster. It was also no surprise to hear that the sector “continued to experience intense cost pressures” due to the weakness of sterling.
Next, a major clothes retailer issued a warning, which could be the first of many from the high street. The retailer reported falling sales and warned 2017 would be “challenging”. Times are changing as the high street continues to lose wallet share to the ever increasing presence of online retailers plus rising inflation erodes earnings growth and squeezes consumer spending.
The final and most closely watched PMI data is set for release this morning with the focus on the Service sector. This accounts for roughly 70% of economic activity in the UK. This will, therefore, be a key barometer with regards to growth in the economy. In addition, Bank of England (BoE) Chief Economist, Andy Haldane is due to speak at the Institute for Government. The market will keep one eye on what he discusses for clues on future policy form the BoE.
