UK services PMI dips to 53.0 in January, at 16-month lows

The services sector activity in the UK economy rebounded sharply and surprised markets to the upside in January, a fresh report from Markit Economics showed on Monday.

The services PMI jumped to 53.0 in January versus a 54.2 reading booked in December. Markets predicted an expansion to 54.3 last month.

Key Points:

Services output rises at the slowest pace since September 2016.

New order growth weaker than 2017 average.

Price pressures remain elevated, but wane as costs show the smallest rise for 16 months.

Chris Williamson, Chief Economist at Markit, noted: “The pace of UK economic growth slowed sharply at the start of the year as January saw a triple whammy of weaker PMI surveys. Service sector expansion slid to a 16-month low, reflecting a marked waning in growth of demand for business and consumer-facing services such as hotels and restaurants. Demand for transport and communication services was down for the second straight month. “The softer service sector growth follows news of the manufacturing upturn losing momentum at the start of the year and a near-stagnant construction sector. All together, the PMI surveys point to the slowest pace of expansion since August 2016.”