U.K. Services Get Boost From Election as New Orders Increase
U.K. Services Get Boost From Election as New Orders Increase
The U.K.’s dominant services sector showed signs of strengthening at the end of the year following Boris Johnson’s decisive election victory.
New orders rose at their fastest pace in five months, IHS Markit said Monday, with anecdotal evidence suggesting that the easing of domestic political uncertainty played a key role. The uptick left services activity with an index reading of 50 in December, up from a flash estimate of 49 that was compiled only using data from before the Dec. 12 vote. The composite measure reached 49.3 from a previous estimate of 48.5.
The pound rose after the figures were published and was trading at $1.31 as of 9:45 a.m. in London.
Johnson’s victory ensures that the U.K. will leave the European Union with a transition deal on Jan. 31. Uncertainty created by Brexit has weighed on the outlook since the 2016 referendum.
“The latest U.K. service sector figures are an improvement,” said Tim Moore, economics associate director at IHS Markit. “The modest rebound in new work provides another signal that business conditions should begin to improve in the coming months.”
Key Insights
- Business optimism rose at the fastest pace in more than a year. IHS said a number of respondents predicted a short- term boost to when the first stage of Brexit is resolved
- Export orders contracted for a fourth month though as uncertainty related to the U.K.’s departure from the EU delayed decisions
- Data for the final reading were collected Dec. 5-19
--With assistance from Jill Ward.
To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net
To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Brian Swint
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