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UK services lift PMI, Nomura flags upside BoE rate risks

Nomura forecasts no Bank of England rate change this year, but says input and output price measures are above February and could push rates higher if pressure persists.

Reported · Written up by our desk · Central Banks

Nomura’s European Economics team said the UK composite output PMI rose to 52.5 in August, with strength in services offsetting a decline in manufacturing output.

The firm pointed to improving consumer sentiment, citing GfK confidence rising to minus 14 in August from minus 17, its highest reading in two years, as support for activity.

Nomura also highlighted price risks, saying the composite input price index climbed 1.4 points to 67.2 and the composite output price index rose 0.7 points to 57.1, both higher than February levels.

While Nomura is forecasting no Bank of England rate change this year, it warned that the rise in UK services sector price indices leaves upside risk for further tightening if price pressures continue, and it urged watching forward-looking indicators such as the BoE’s DMP survey.

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