UK Services Sector Growth Eases

Although the UK service sector continued to expand at the start of 2017, the pace of growth in total business activity moderated for the first time in four months according to the latest PMI® survey from IHS Markit and CIPS (Source Supply Management, 3rd February 2017)

The latest PMI figures discussed in Supply Management says "new business and employment also increased at slower rates, and outstanding work fell slightly. Inflationary pressures remained intense, with input price inflation accelerating to the highest since March 2011 and charges rising at a rate unchanged from December’s 68-month record. More positively, business expectations improved to the strongest since May 2016.

The survey’s headline figure is the seasonally adjusted Markit/CIPS Services PMI Business Activity Index, a single-figure measure designed to track changes in total activity. Readings above 50.0 signal growth compared with the previous month, and below 50.0 contraction. The Index remained above 50.0 for the sixth consecutive month in January, indicating a continued recovery in growth following a contraction last July linked to the EU referendum. That said, the Index fell for the first time since September to 54.5, and signalled the weakest expansion in three months. The rate of  Markit / CIPS UK Services PMI  growth was solid overall, but slightly weaker than the 20-year long-run survey average.

New business also increased for the sixth consecutive month in January. The rate of growth was slower than in December, but nonetheless the second-fastest registered since January 2016. Meanwhile, the volume of outstanding business fell for the first time in three months, albeit only marginally.

Following the trends shown for activity and new work, employment in the UK service sector rose for the sixth consecutive month in January. The rate of job creation slowed to a five-month low. However cost inflationary pressures remained elevated at the start of the year. The rate of input price inflation accelerated further to the highest since March 2011. Anecdotal evidence widely attributed cost pressures to fuel, salaries, freight charges and imports (in general linked to the weak pound)."

See the full article in Supply Management.
03.02.2017

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