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UK and Germany flash PMIs point to mixed euro area momentum
UK composite services growth stayed lackluster while manufacturing picked up, and the report flagged cooling price pressures from lower oil as a factor for Bank of England rate expectations.
UK July flash services and composite activity rose, with services PMI coming in at 51.8 versus 49.4 expected, after a 48.8 print in the prior period, according to Forexlive. The outlet said hospitality demand was supported by good weather, the FIFA World Cup, and more domestic holidays, but services growth remained weak under cost-of-living pressures.
Forexlive reported that manufacturing was expanding faster than services, with manufacturing PMI at 52.8 versus 52.0 expected, up from a 52.5 prior reading. It noted businesses were building precautionary inventories tied to supply chain disruption linked to the war in the Middle East, and warned that part of the factory upturn could be short-lived.
On prices and policy, Forexlive said price pressures cooled thanks to lower oil prices seen earlier in the month, which could reinforce speculation the Bank of England will hold off on rate rises. Still, it added that inflation pressures remained elevated due to the ongoing energy shock and supply squeeze from the Middle East conflict, which has also weighed on employment, with job numbers declining continuously since the Autumn 2024 Budget.
In Germany, Forexlive said the July flash manufacturing PMI was 52.2 versus 50.5 expected, after a 50.3 prior reading, while services PMI was 49.6 versus 49.0 expected, up from 48.6. The outlet also cited a composite PMI at 50.5, suggesting mixed signals for broader activity.