UK: Services PMI dropped in January - TDS

The UK services PMI slipped from 54.2 to 53.0 in January (mkt 54.1), in line with the weakness we saw in last week's manufacturing and construction PMIs, explains the research team at TDS.

Key Quotes

“The one thing that stood out to us in the report was more mention of Brexit uncertainty than we've seen for a while - that was to blame for slower current activity and creating downward pressure on new business inflows. This highlights the need for a transition agreement to be put in place as soon as possible, to create some certainty for at least the next couple of years.The strongest spots for today's survey were in employment (a 4-month high), as well as business optimism (a 10-month high).”

“If these lower PMI levels hold through Q1, they do point to downside risks for H1 GDP growth, and leave our call for a May rate hike from the BoE much more uncertain. More clarity on Brexit should help to drive a bounce higher though.”