United Kingdom: Services-led growth and price risks – Nomura
Nomura’s European Economics team highlights that UK composite output PMI rose to 52.5 in August, with services offsetting weaker manufacturing. GfK consumer confidence improved to its highest level in two years, supporting activity.
The United Kingdom's economy showed strong services-led growth in August, with the composite output PMI rising to 52.5, according to Nomura's European Economics team. This growth was driven by the services sector, which offset weaker manufacturing performance. However, both composite input and output price indices climbed above February levels, suggesting that the Bank of England may need to raise interest rates in response to potential price pressures.
UK consumer confidence improved to its highest level in two years, indicating a supportive environment for economic activity. Meanwhile, the manufacturing output index declined in August, while the services sector contributed to the overall increase in the composite index. Despite these positive signals, Nomura flagged upside risks if price pressures persist, as the rise in service sector price indices highlights the potential need for the BoE to raise rates.
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