Are Services Going to Fall in Contraction as Well in the UK?
The UK economic data has been really horrible recently and if services fall in contraction today, the UK economy will enter recession
The UK economy was pretty weak last year, but in Q1 of this year, we saw a small rebound as the global slowdown paused for a while and the UK firms were building up their inventories ahead of a disruptive Brexit. But that rebound was shortlived indeed, because the UK economy has dived in the last few months as the economic data has shown recently.
The GDP has been declining in the last two months, industrial production has also declined, and the manufacturing sector is in contraction. The consumer and business confidence have fallen in negative territory and yesterday we saw the construction sector fall really deep in contraction to 43 points.
The services sector fell in contraction in March briefly, but it recuperated in the next two months and now stands at 51.0 points. In June, this sector is expected to remain in the same level at 51 points, but after seeing the rest of the economy and especially the horrible construction report yesterday, chances are that we might see another negative number today from services.
This sector is pretty close to contraction and a decline would take it there. This is also the biggest sector, accounting for around 4/5th of the UK economy, so if it dives in contraction, then the UK economy will fall into recession and the GBP will dive. So, let’s get loaded as the report will be released in about an hour.
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