Signs of a rebound in Q2

The improvement in all three Markit/CIPS PMI surveys in June provided further signs that the economy has rebounded after the weak start to the year. Indeed, the all-sector PMI rose from 54.3 in May to 55.0, suggesting that quarterly GDP growth has accelerated to 0.4% or so in Q2 – up from 0.2% in Q1 and in line with the Monetary Policy Committee (MPC)’s forecast. Note too that if anything the surveys might be understating growth since the service sector PMI does not account for activity on the high street, which has rebounded strongly in Q2 so far. Overall, then, the figures provide reassurance that services – and overall economic – growth has picked up some pace in the second quarter. As things stand, we remain comfortable in our view that interest rates will rise at the MPC’s next meeting on 2nd August.