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James Smith, developed markets economist at ING, notes that the UK services PMI printed 50.4 in April, as the latest Markit/CIPs PMI also indicates that the sector got off to a fairly rocky start in the second quarter.

Key Quotes

“While businesses were reportedly a little more upbeat, perhaps following the recent extension to Article 50, new orders and backlogs of work slipped. Some of that is reportedly down to subdued consumer spending, which has the potential to perform a little better in the near-term.”

“Real wage growth has begun to rise, while a reduction in dramatic Brexit headlines may help lift confidence a little, perhaps when it comes to purchasing bigger ticket items.”

“This may give the economy a little support over coming months, but overall we expect growth to remain fairly sluggish. Admittedly, it will be a bit tricky to get a clear picture  from the official data over the coming weeks. Next week’s GDP data is likely to  be distorted by the frenzy of stockpiling activity, which will unwind in the subsequent second-quarter figures.”