UK DATA: PMI: Growth AI/defence-driven, costs passed on, labour stabilising

UK flash PMI was a little lower than expected for services but a little lower for manufacturing. Some interesting themes in here: job numbers still decreasing but at only a marginal pace (supporting other evidence of the bottoming out of the labour market that Ramsden in particular is focused on). Growth being concentrated in technology (AI driven) and defence, but consumer-driven sectors still subdued - which has been evident in the most recent GDP data too with AI in particular driving higher-than-expected growth. And price pressures starting to be passed on more.

All of which signals probably more in the direction of the PMI data being increasingly supportive of a hike. Highlights from the press release below: * "Service providers noted that subdued domestic economic conditions and ongoing geopolitical uncertainty were factors that constrained business activity growth in September, although some firms again cited a boost in demand for technology services. " * "Employment numbers decreased in September, which marked two years of continuous job losses. " * "The latest survey indicated a steep and accelerated increase in average cost burdens at private sector companies, with the rate of inflation hitting a three-month high...

" * "Despite rising inflationary pressures and weaker demand patterns, latest data indicated that overall business optimism was unchanged from August's six-month high. Manufacturers were particularly upbeat about the growth outlook, with confidence the strongest since February amid reports of planned new project starts and higher investment spending on plant capacity. Service providers signalled a slight easing in business confidence during September, which some linked to rising geopolitical uncertainty, but there were still a number of firms citing optimism about the longer-term economic outlook and hopes of a rebound in sales opportunities.