UK services activity slows as price pressures rocket - Markit

Samuel SharpFeb 05, 2017

However, the figure was offset by data showing that the input costs index rose from 66.8 to 69.1, its highest since January 2011 and a more positive figure for Sterling.

The closely-watched Markit/CIPS purchasing managers' index (PMI) reached 54.5 in January, down from 56.2 in December and below economists' forecasts of 55.8.

The sub-index for new export business, which dipped marginally into negative territory in November, recorded its second successive monthly increase, helped by stronger demand from the UK.

There is evidence that higher costs are deterring some companies from taking on extra staff, with the January surveys finding employment to have increased at the slowest rate since August.

A survey by the same firm on Wednesday showed slight improvement in the health of India's manufacturing as manufacturing PMI was up to 50.4 during the month from 49.6 in December 2016, suggesting modest expansion.

It trimmed its expectations for inflation and substantially raised its growth forecasts for this year and the next two saying that it expected consumers would continue to spend, supported by savings and taking on cheap credit.

The Eurozone economy kicked off the year with solid gains in private sector activity, according to PMI data from IHS Markit, with growth holding at its best pace in at least five and a half years.

Chris Williamson, chief business economist at IHS Markit, said despite January's slowdown, the industry still made a bouyant start to the year. "Only construction companies stepped up their hiring at the start of 2017".

Markit said the economy was on track to grow 0.5% in the first quarter of 2017.

The report follows the Bank of England's move on Thursday to revise its growth forecast for the United Kingdom economy sharply higher, to 2% from the 1.4% it had predicted in November.

"Inflationary pressures are becoming increasingly concerning", said Martin Beck, senior economic adviser to the forecasters EY Item Club, commenting on the poll.

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