Services business index rises to 51.7 in January

by Frankie Norman February 6, 2018, 13:38
Services business index rises to 51.7 in January

The Caixin composite Purchasing Managers Index (PMI) rose to 53.7 in January from 53.0 in December, data from IHS Markit showed Monday.

Anything above 50 signals growth, while anything below means a contraction in activity - so the higher the number is, the better things look for the UK.

"The January slowdown pushes the all-sector PMI into dovish territory", said Chris Williamson, chief business economist at IHS Markit.

"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".

"January's [PMI] report should prompt investors to reassess their view that the chance of the [Bank's] Monetary Policy Committee raising interest rates again as soon as May is as high as 50 per cent", said Samuel Tombs of Pantheon.

The PMI survey produced a reading of 53 in January, against a reading of 54.2 in December.

First, last Thursday, IHS Markit's manufacturing PMI was below expectations, with Rob Dobson, a director at the data firm saying that "the United Kingdom manufacturing sector reported an unwelcome combination of slower growth and rising prices at the start of 2018".

Williamson said that the January numbers were signalling a United Kingdom growth rate of "just under 0.3 per cent" for the first quarter of 2018, which would mark a slowdown from 0.5 per cent in December. Most importantly, growth of new orders jumped higher in both sectors in January, registering the largest upturn in new work since last August and one of the biggest gains seen over the past three years.

Last month's readings suggest the economy is running at a quarterly growth rate of just under 0.3 percent.

The index for new business rose to 52.2 from 51.1 in the previous month, and the rate of growth accelerated for the first time since October.

Suchita Dutta, executive director of the Indian Staffing Federation (ISF), said the second half of the fiscal usually sees spike in job numbers in the e-commerce, healthcare and hospitality sector due to festive season. Nonetheless, competitive pressures ensured that the rate of inflation was marginal.

That had sparked a shift in expectations about United Kingdom interest rates, with investors raising bets on a hike as early as May.

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