The numbers coming out of the UK over the last few months have been very impressive. First, consider the Markit Services index:
August's survey of UK service providers signalled continued strong growth of activity and new business. Activity rose at the sharpest pace since December 2006, while growth in new work was the best seen since May 1997.
Capacity continued to be tested, with backlogs of work rising at the sharpest pace for over 13 years. However, employment broadly stagnated, in part due to an inability of service providers to replace leavers.
The headline seasonally adjusted Business Activity Index registered 60.5 in August. Improving on July's 60.2, the latest reading was the highest in over six-and-a-half years. Over a quarter of the survey panel registered an increase in activity.
Here is the accompanying chart:
The latest print is above all readings from the recovery.
August data indicated another strong improvement in the overall performance of the UK construction sector, as highlighted by steep and accelerated expansions of both output and new business volumes. Construction companies also remain confident about the year-ahead outlook for business activity at their units, with around 46% of survey respondents expecting a rise and only 10% a reduction.
Adjusted for seasonal influences, the headline Markit/CIPS UK Construction Purchasing Managers' Index® (PMI®) registered 59.1 in August up from 57.0 in July and above the neutral 50.0 value for the fourth consecutive month. The latest reading indicated a sharp rise in total business activity and the fastest pace of output expansion in the construction sector since September 2007.
Here's the accompanying data:
Again, this is the strongest print of the recovery.
Latest data indicated that the UK manufacturing sector maintained its robust start to the third quarter of 2013. After the solid increases in output and new orders registered in July, August saw the momentum continue to build, with growth rates for both variables at their highest since 1994. However, cost inflationary pressures surged higher on the back of rising raw material prices.
The seasonally adjusted Markit/CIPS Purchasing Manager's Index® (PMI®) hit a two-and-a-half year high of 57.2 in August, up from a revised reading of 54.8
in July (previously reported as 54.6). The PMI has signalled expansion for five successive months.
Here's a chart of the manufacturing data:
The manufacturing number is rising strongly.
While all the usual caveats apply, these numbers all point to higher growth in the next few quarters.
Let's take a look at the UK ETF:
The UK ETF is a buy right now. Not only are the economic fundamentals positive, the the ETF is in a bullish posture. Prices broke through the lower 19 level on a strong volume spike. This was accompanied by risking volume. All the EMAs are rising -- including the long-term trend (the 200 day EMA). In addition, the MACD and CMF show increasing upward momentum and rising volume inflow.