Nailed-on for a stronger UK services PMI after factory surge?

November 2, 2015

A surprisingly strong surge in British manufacturing growth last month has left a few economists scratching their heads. Is it a one-off? Could a manufacturing recovery really appear out of seemingly nowhere?

The answers are probably a few months away but they can at least be fairly sure of one thing — Wednesday’s Markit/CIPS services PMI will also show an improvement, if past patterns are anything to go by.

The manufacturing PMI shot up 3.7 points in October from September, hitting a 16-month of 55.5. This was 3 points higher than the most optimistic forecast in a Reuters poll. Increases that big — or greater — have always been accompanied by a rise in the services PMI in the same month.

uk man pmi

A better services number on Wednesday wouldn’t be a surprise — only one out of 37 economists polled by Reuters last week predicted a weaker reading in October. But the extent of the improvement could go some way to working out if the apparent surge in manufacturing is a blip, or if the economy really might have found a second wind in the final months of the year.

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