On Thursday morning, data revealed the dominant UK services sector took an unexpected hit last month, suffering the largest cut in employment in over nine years. Business expectations weakened for the fourth consecutive month, showing that all three sectors – services, manufacturing and construction – registered lower output last month. Excluding the month following the EU referendum, this was the first broad-based decline since April 2009.
Commenting on the data, Duncan Brock, Group Director at the Chartered Institute of Procurement and Supply said: “Momentum and optimism were in woefully short supply in September after many months of persistent uncertainty in 2019 pushed the index below the no-change mark.
“Deferred client orders and reduced consumer spending as a result of Brexit uncertainty and a slowing global economy meant hard-pressed businesses started to lose their battle against the hardest conditions for about a decade.”
Meanwhile, the US dollar was weakened as investors fretted over further signs of a slowdown in the US economy.
On Thursday, Chicago Federal Reserve Bank President Charles Evans said the outlook for the economy was “quite good”.
However, he noted that modest monetary policy adjustments would not be enough to prevent potential economic shocks.
Speaking in Madrid, Mr Evans said: “If there is an event that shocks the world economy or the US economy, these modest adjustments are not going to be nearly enough, this is very much just risk management to help make things work out better as we strive to bring in growth at about 2 per cent over the next 18 months.
“The US economy continues to grow above trend […] US economic outlook is quite good, it still has strong fundamentals.”
Looking ahead to Friday, the latest US non-farm payrolls will edge into the spotlight and provide a better picture of the US labour market which has been weakened by US-China trade tensions.