UK Services Slowdown Takes Shine Off Economic Optimism

UK Services Slowdown Takes Shine Off Economic Optimism

Troy Powers
February 6, 2018

A number above 50 indicates expansion, while a figure below that points to contraction.

While optimism remained in the sector, with growth in new orders increasing at a slightly quicker pace in January, the overall rate of expansion was slower than seen during most of 2017, the UK's purchasing managers reported.

Despite the improvement in services activity, a composite PMI, which tracks both manufacturing and services businesses, fell to 52.5 from 53.0 in December.

Growth in Britain's dominant services sectors dipped in January as lingering concerns over the UK's withdrawal from the European Union continued to sap demand.

The pace of growth has slowed sharply since the start of the year, with surveys revealing that the economy has suffered a "triple whammy". They come just days before the Bank of England's latest policy decision, when it will also update forecasts that are key to the outlook for interest rates.

New business inflows and all the backlogs in the Indian service providers were taken care of by increasing the workforce for the fifth month in January.

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The Caixin China General Services Business Activity Index rose to 54.7 last month, up from 53.9 in December.

With a PMI of 50.5 in January, he believes that the economy will sustain a 5.5% growth rate in 1H18 from an expected gross domestic product growth of 5.7% in the fourth quarter of 2017.

Businesses were hurt by weak demand for most of 2017 after a November 2016 ban of high-value currency notes and confusion over pricing following the introduction of a goods and services tax past year disrupted consumer spending.

The inflation in input prices in the services industry rose by its steepest level since April 2012 in January, the survey showed.

The Bank raised rates from 0.25 per cent to 0.5 per cent last November in response to what it described as building underlying inflationary pressures, the first hike in the United Kingdom cost of borrowing for a decade.

Despite the slowdown, business confidence is at its strongest since last March, with firms still optimistic that business activity will be higher over the course of 2018.