UK: Services outlook cloudy? - ING

According to James Smith, Developed Markets Economist at ING, the latest UK services PMI figure of 53.9 suggests growth in the sector remains solid, if a little unexciting.

Key Quotes

“For Bank of England policymakers, the underlying story paints a mixed picture.”

“On one hand, the Markit/CIPS press release again talks about firms operating at stretched capacity, given the increasing challenge in recruiting specialist staff. This, in turn, is forcing firms to lift salaries in a bid to attract/retain talent and suggests the better wage growth momentum we've seen this year is set to persist.”

“That makes it likely that the Bank of England officials will continue to talk up the prospects of further tightening, but with Brexit risks mounting, realistically we think another rate hike before March 2019 is unlikely.”