05/10/2017 - Services Sector Data Supports Sterling

GBP

Early on in yesterday’s session the Pound rose after new data showed the services sector beat expectations in September, becoming the only one of the UK's three biggest sectors not to disappoint analysts.

Sterling gained after IHS Markit's said its closely-watched purchasing managers' index (PMI) for the services sector had risen to 53.6 in September, ahead of expectations of 53.2. Any figure above 50 denotes growth.

Economists later warned that firms in the sector were showing signs of weakness. Many have said that the subdued domestic demand has acted as a drag on activity growth and has pushed incoming new work to its lowest in over a year. Costs rose at their fastest since April while slow business-to-business sales and delayed decision-making on large projects compounded their woes.

USD

The non-farm estimate figure showed US private employers added 135,000 jobs in September, topping economists’ expectations even as Hurricane Harvey and Irma significantly impacted smaller retailers.

The September reading was smallest increase since October 2016 due in part to the natural disasters and could be due to a lack of competitive compensation to attract skilled talent.

The ADP report comes ahead of the monthly non-farm payrolls which is expected to show slower gains in employment. Economists expect nonfarm jobs to rise by 80,000 for September, compared with a gain of 156,000 the prior month.

The Institute for Supply Management's index showed non-manufacturing economic activity rose in September, beating expectations and building on momentum begun in August. Fourteen of the 17 nonmanufacturing industries surveyed reported growth in September. Three industries; educational services, mining and agriculture and forestry reported contractions.

Key Announcements

13:30 – USD – Unemployment Claims is expected to fall to 266k