UK July final services PMI 59.6 vs 57.8 prelim

Latest data released by Markit/CIPS – 4 August 2021

  • Composite PMI 59.2 vs 57.7 prelim
The preliminary report can be found here. That’s a decent bump in the final readings but it still reaffirms the slowest growth in UK business activity since March.
Staff shortages amid self-isolation restrictions contributed to that alongside strongest input cost inflation on record, as price pressures continue to soar. Markit notes that:

“July data illustrates that recovery speed across the UK economy has slowed in comparison to the second quarter of 2021. More businesses are experiencing growth constraints from supply shortages of labour and materials, while on the demand side we’ve already seen the peak phase of pent up consumer spending.

“The full easing of pandemic restrictions appears to have helped limit the overall loss of momentum towards the end of July. At 59.6, the PMI reading for services output was much stronger than our earlier ‘flash’ figure of 57.8 in July, largely due to the final index covering an extra five working days since ‘freedom day’.

“Any re-acceleration of growth in August looks unlikely, however, as new orders increased at a much-reduced pace at the start of the third quarter. Moreover, business expectations softened again during July, with UK firms the least optimistic about the growth outlook since January. Survey respondents cited worries about recruiting staff to meet business expansion plans and some suggested that escalating costs would hinder the recovery.”

Eurozone July final services PMI 59.8 vs 60.4 prelim

Latest data released by Markit – 4 August 2021

  • Composite PMI 60.2 vs 60.6 prelim
The preliminary report can be found here. Slightly softer revisions but it still reflects the strongest growth in business activity in the Eurozone in just over 15 years.
The easing of virus restrictions have helped bolster sentiment in the services sector in the summer but concerns still persist amid the spread of the delta variant.
For now, the record surge in prices is still something that hasn’t quite put a major dent on demand conditions but we’ll see if that can stay the case in the months ahead once the supposed pent-up demand “honeymoon” period is over.
Markit notes that:

“Europe’s service sector is springing back into life. Easing virus restrictions and further vaccination progress are boosting demand for a wide variety of activities, especially in the tourism, travel and hospitality sector. It’s not just the consumer sector that is booming, however, with business and financial service providers also enjoying a growth spurt as broader economic recovery hopes build.

“Alongside the sustained elevated growth recorded in the manufacturing sector, the impressive strength of the service sector’s expansion in July means the eurozone should see GDP growth accelerate in the third quarter.

“Worries about the Delta variant have become more widespread, however, subduing activity in some instances and raising concerns about the possibility of virus restrictions being tightened again. Hence services growth in July was slightly less marked than the earlier flash estimate and future expectations cooled to the lowest since March, presenting a significant downside risk to the outlook and hinting that growth could begin to slow again as we head toward the autumn.

“Furthermore, up to now companies have generally seen little resistance from customers to higher prices, but this could change after the current rebound from lockdown restrictions has passed.”

US stocks close higher and near session highs

Record close for the S&P 500

The major US stock indices are closing higher and near session highs:
  • S&P closed at a record level
  • NASDAQ posts a two day win streak
  • Energy (+1.83%), industrials (+1.38%), healthcare (+1.42%), financials (+1.13%) led the charge
  • communication services fell -0.19%
  • Dow and S&P snap a two day losing streak
The final numbers are showing:
  • Dow industrial average rose 278.24 points or 0.80% at 35116.40
  • S&P index rose 36 points or 0.82% at 4223.15
  • NASDAQ index rose 80.22 points or 0.55% at 14761.29
  • Russell 2000 rose 2.10 points or 0.37% at 2223.60.
Some big winners today included:
  • Under armour, +7.58%
  • Snowflake, +6.14%
  • First Solar, +4.61%
  • Nucor, +4.5%
  • Micron, +4.15%
  • Pfizer, +4.0%
  • AMD, +3.63%
  • Novavax, +3.10%
  • PNC, +2.51%
  • Wells Fargo, +2.27%
  • Gilead, +2.15%
Big losers include:
  • Tencent, -7.65%
  • Corsair, -6.38%
  • Viacom, -5.78%
  • AMC, -4.343%
  • Rackspace, -3.36%
  • Rocket, -3.35%
  • Koss, -3.28%
  • GameStop, -3.24%
  • Nio, -2.79%
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