Services and non-manufacturing sectors – Comparing UK to the US - Forex News by FX Leaders

Services and non-manufacturing sectors – Comparing UK to the US

Posted Wednesday, August 3, 2016 by
Skerdian Meta • 2 min read

The final US services reading for July came out slightly better than expected at 51.4 PMI, while the non-manufacturing data posted 55.5 PMI. This shows that this sector is very healthy, even though it missed the expectations. The demand for the USD is back now, particularly after the non-manufacturing numbers and is about 30 pips up in all forex pairs. The forex market got a dose of panic when the US GDP data really disappointed last Friday, but after the US economic data keeps improving which shows that the move on Friday was an overreaction.

The decline in EUR/USD accelerated after the US economic data was published

How about if we compare these data pieces to the UK? The Service sector in the UK was quite robust and until the Brexit referendum, it kept leading the economy forward despite global headwinds. Now, it is terribly in contraction while the same sector in the US is expanding with the sam pace. Similarly to the service sectors, the UK and US construction sectors were as close to top performance as it gets.

At the moment, the UK construction is close to recession after shrinking for the second month, while the US construction is keeping up the pace. In terms of economic performance until a couple of months ago, it was, China and Japan at the bottom, with slight contraction/recession, then Europe just holding the head above water, then it was the US and the UK at the top doing quite well. In fact, the UK economy outperformed the US economy in some sectors. Now, the UK is deep down the hole, so deep that it makes you wonder if it can get back up. How can you do this to yourself after getting out of a decade-long global crisis?  

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About the author

Skerdian Meta // Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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