The FTSE 100 index slipped by more than 0.68% on Thursday ahead the release of UK’s May PMI data. The Euro STOXX index has drifted away from its previous high records and dropped by 0.2%. other European indices like the French CAC 40 and Germany’s DAX fell by more than 0.15%.
UK’s Bullish Signal Towards the GBP
The United Kingdom released its latest economic data on Thursday. The UK Composite Purchasing Managers’ Index (PMI) rose after hitting its highest level since January 1998. The Composite PMI, which includes manufacturing data, rose to 62.9 in May from its previous 62.0 in April. This was also a contrast to the estimate forecast for a 62.0.
The UK Services Purchasing Managers’ Index (PMI) has signaled a bullish view towards the GBP after hitting a 24-year high in May. The Services PMI rose to 62.9 in May from 61.0 in April, the highest since May 1997. Tim Moore, economics director at IHS Markit, stated that:
“The latest survey results set the scene for an eye-popping rate of UK GDP growth in the second quarter of 2021, led by the reopening of customer-facing parts of the economy after winter lockdowns.”
According to a business survey, Britain’s service sector recorded gains after restaurants were allowed to resume serving customers indoors after many months of lockdown restrictions.
The PMI showed that the biggest rise in prices was contributed by services businesses is due to an increase in transport bills, staffing costs and price of raw materials. This was after a sharp rise in inflation.
Staff numbers in the United Kingdom rose in January 2020 to 31.6 million which was the highest in 6 years. However, in three months to March 2021, staff numbers were at 31.1 million. But with the easing of lockdown restrictions, staff numbers are expected to increase. Most businesses have brought back workers who had been let off and hired new ones. Some businesses that had a shortage in staff had to raise pay offers.
Demand for goods from overseas slipped as most demands were domestic. This led to the declining of services exports which contributed to a drop in the FTSE 100 index.
FTSE 100 Performers
Johnson Matthey, a multinational specialty chemicals and sustainable technologies company, was the best performer in the FTSE 100 index. It recorded a gain of 1.01%. Other companies like Ferguson Plc and Pearson Plc were among the top performers in the index with 0.89% and 0.84% gains, respectively.
National Grid, an energy company, was the worst performer in the FTSE 100 index. It was down by 4.66%. B&M European Value Retail SA and Kingfisher also slipped by 3.99% and 3.11% respectively.