LONDON: Britain’s economy appears to be picking up speed, according to a survey on Friday that will reassure the Bank of England a day after it raised interest rates for the first time a decade.
Sterling hit a day’s high against the dollar after the IHS Markit/CIPS services Purchasing Managers’ Index (PMI) jumped to 55.6 in October from 53.6 in September, its biggest one-month rise since August 2016.
Despite nervousness among businesses about Brexit, the reading was its highest since April and exceeded all forecasts in a Reuters poll of economists.
The survey of services businesses, which account for around 80 percent of British economic output, follows relatively upbeat PMI readings this week for the smaller manufacturing and construction sectors.
Taken together they suggest the economy is growing at a quarterly rate of 0.5 percent, IHS Markit said, picking up from growth of 0.4 percent in the three months to September.
Britain’s economy has lagged behind others in Europe and beyond this year as sterling’s plunge following last year’s vote to leave the European Union pushes up inflation and uncertainty over the shape of Brexit causes businesses invest more slowly.
“The UK PMI may be starting to show some convergence with its firm global counterpart,” JPMorgan economist Allan Monks said.
Growth in the services sector outpaced that in the euro zone, as measured by a flash estimate, for the first time since January, the PMI showed. IHS Markit will publish a final estimate for the euro zone on Monday.
“The Bank of England will likely see October’s (PMIs) as supportive to the decision to raise interest rates,” said Howard Archer, chief economic adviser to the EY ITEM Club consultancy.
Many private economists had warned before Thursday’s decision by the BoE that a rate hike would be premature.
“However, serious uncertainties over the outlook evident among services companies fuels suspicion that it is likely to be some considerable time before the Bank of England hikes interest rates again,” Archer said.
The BoE raised rates for the first time in more than 10 years on Thursday and said its next increases would be “very gradual.”
Deputy Governor Ben Broadbent said on Friday that the BoE’s signal that it may need to raise interest rates two more times to bring down inflation was not a promise.
Businesses are unsure about the outlook, and optimism among services companies remained well below its long-run average, fueled mainly by uncertainty over Brexit, the PMI data showed.
“A deeper dive into the numbers highlights the fragility of the economy,” said Chris Williamson, chief business economist at IHS Markit, which compiles the PMIs.
BoE Governor Mark Carney said on Thursday that the central bank’s next move would be heavily influenced by the progress of talks on Britain’s departure from the EU.
Growth could get a boost if a transitional deal gave businesses confidence to invest.
But a failure to reach a deal would further weaken the pound and intensify inflation pressure.
The services PMI, which covers non-retail businesses, said firms were putting up prices at the fastest rate since April.
Costs increased rapidly, though at the slowest rate in just over a year, possibly tallying with the BoE’s view that the inflationary effect of last year’s more than 10 percent fall in the value of the pound is starting to fade.
Across the economy as a whole, the PMI showed that job creation was at its weakest since March.
“Squeezed margins and concerns about the economic outlook had led to more cautious hiring strategies,” IHS Markit said.
UK economy picks up speed, PMI survey shows
UK economy picks up speed, PMI survey shows
AI will never replace human creativity, says SRMG CEO
- Speaking to Maya Hojeij, senior business anchor at Asharq with Bloomberg, Jomana R. Alrashid expressed pride in SRMG platforms that had absorbed and adopted AI
RIYADH: Jomana R. Alrashid, CEO of Saudi Research and Media Group, highlighted how AI cannot replace human creativity during a session at The Family Office’s “Investing Is a Sea” summit at Shura Island on Friday.
“You can never replace human creativity. Journalism at the end of the day, and content creation, is all about storytelling, and that’s a creative role that AI does not have the power to do just yet,” Alrashid told the investment summit.
“We will never eliminate that human role which comes in to actually tell that story, do the actual investigative reporting around it, make sure to be able to also tell you what’s news or what’s factual from what’s wrong ... what’s a misinformation from bias, and that’s the bigger role that the editorial player does in the newsroom.”
Speaking on the topic of AI, moderated by Maya Hojeij, senior business anchor at Asharq with Bloomberg, the CEO expressed her pride in SRMG platforms that had absorbed and adopted AI in a way that was “transformative.”
“We are now translating all of our content leveraging AI. We are also now being able to create documentaries leveraging AI. We now have AI-facilitated fact-checking, AI facilities clipping, transcribing. This is what we believe is the future.”
Alrashid was asked what the journalist of the future would look like. “He’s a journalist and an engineer. He’s someone who needs to understand data. And I think this is another topic that is extremely important, understanding the data that you’re working with,” she said.
“This is something that AI has facilitated as well. I must say that over the past 20 years in the region, especially when it comes to media companies, we did not understand the importance of data.”
The CEO highlighted that previously, media would rely on polling, surveys or viewership numbers, but now more detailed information about what viewers wanted was available.
During the fireside session, Alrashid was asked how the international community viewed the Middle Eastern media. Alrashid said that over the past decades it had played a critical role in informing wider audiences about issues that were extremely complex — politically, culturally and economically — and continued to play that role.
“Right now it has a bigger role to play, given the role again of social media, citizen journalists, content creators. But I also do believe that it has been facilitated by the power that AI has. Now immediately, you can ensure that that kind of content that is being created by credible, tier-A journalists, world-class journalists, can travel beyond its borders, can travel instantly to target different geographies, different people, different countries, in different languages, in different formats.”
She said that there was a big opportunity for Arab media not to be limited to simply Arab consumption, but to finally transcend borders and be available in different languages and to cater to their audiences.
The CEO expressed optimism about the future, emphasizing the importance of having a clear vision, a strong strategy, and full team alignment.
Traditional advertising models, once centered on television and print, were rapidly changing, with social media platforms now dominating advertising revenue.
“It’s drastically changing. Ultimately in the past, we used to compete with one another over viewership. But now we’re also competing with the likes of social media platforms; 80 percent of the advertising revenue in the Middle East goes to the social media platforms, but that means that there’s 80 percent interest opportunities.”
She said that the challenge was to create the right content on these platforms that engaged the target audiences and enabled commercial partnerships. “I don’t think this is a secret, but brands do not like to advertise with news channels. Ultimately, it’s always related with either conflict or war, which is a deterrent to advertisers.
“And that’s why we’ve entered new verticals such as sports. And that’s why we also double down on our lifestyle vertical. Ultimately, we have the largest market share when it comes to lifestyle ... And we’ve launched new platforms such as Billboard Arabia that gives us an entry into music.”
Alrashid said this was why the group was in a strong position to counter the decline in advertising revenues across different platforms, and by introducing new products.
“Another very important IP that we’ve created is events attached to the brands that have been operating in the region for 30-plus years. Any IP or any title right now that doesn’t have an event attached to it is missing out on a very big commercial opportunity that allows us to sit in a room, exchange ideas, talk to one another, get to know one another behind the screen.”
The CEO said that disruption was now constant and often self-driving, adding that the future of the industry was often in storytelling and the ability to innovate by creating persuasive content that connected directly with the audience.
“But the next disruption is going to continue to come from AI. And how quickly this tool and this very powerful technology evolves. And whether we are in a position to cope with it, adapt to it, and absorb it fully or not.”
