Analysts at Rabobank suggest that market will keep a closer eye on the UK services and composite PMIs to gauge whether we can expect a rebound in Q2 GDP -and how strong this will be- after the weak growth at the start of the year.
Key Quotes
“Recall that the weaker economic data was the prime reason for the Bank of England to make an about-turn on an all-but-certain rate hike in May, and signs that the economy is regaining its composure would therefore likely add to the market’s expectations that the Bank will get a second chance to hike in August, or perhaps in November.”
“Finally, over in the US we can expect the ISM services index. The main question will be whether the services sector is also reporting production constraints as a result of input materials or the availability of labour. These sectors may be somewhat less prone to shortages in commodities for their output, but they may also show some signs of stress as a result of the trade tensions. If anything, at an unemployment rate of just 3.8%, their hiring will certainly be affected by the tight labour market that was also reported by manufacturers.”
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