Markets Take June Rate Hike Off the Table

Private sector activity in China expanded at a slower pace in May, with the services sector growth slowing from April's 51.8 to 51.2. This marked the weakest pace of expansion in three months. New businesses rose only marginally in May with new orders in the services sector climbing at a weaker than expected pace. New orders for goods producers fell for the first time in three months as well. Employment in the services sector however showed an expansion while the manufacturing sector cut jobs steeply.

Markit’s services PMI climbed to 53.5 in May after previously falling to 52.3 in April, marking a 38-month low in the UIK. The statistics agency said that activity in the services sector continued to rise at a steady pace since January 2013 but that the latest measurement was the slowest in the past three years. Services sector businesses were optimistic but said that their views were contingent on the outcome of the Brexit referendum on June 23. Employment in the services sector continued to rise but the rate of workers added to the work force slowed precipitously, with some businesses reporting that the introduction of the National Living Wage had an impact on hiring.