UK services sector has worst month in two years, PMI shows
By William Schomberg
LONDON, Feb 3 (Reuters) -Britain's services sector kicked off 2023 with its weakest performance in two years hit by cutbacks to business and consumer spending, according to a survey published on Friday that echoed the Bank of England's recession warnings.
But there were signs of an improvement for some firms.
The final version of the S&P/CIPS UK Services Purchasing Managers' Index (PMI) fell to 48.7 in January, down from 49.9 in December, touching its lowest level since January 2021 when Britain was under a tough coronavirus lockdown.
However, the reading was less weak than the preliminary estimate for January of 48.0.
"The latest survey illustrates that the UK economy risks falling into recession as labour shortages, industrial disputes and higher interest rates take their toll," Tim Moore, economics director at S&P Global Market Intelligence, said.
But the downturn was relatively shallow and new order volumes moved closer to stabilisation while export sales grew, helping to push up employment.
The overall rate of cost inflation eased to its lowest since August 2021 as reduced fuel prices offered some relief and business activity expectations for the year ahead were the strongest reported since April 2022.
The composite PMI, which combines the services survey with Tuesday's manufacturing PMI, slipped back to 48.5 in January from 49.0 in December.
The BoE warned on Thursday of a recession lasting five quarters starting in early 2023 although its forecast for the downturn was less severe than its projection in November.
The British central bank also toned down its guidance about the need for future interest rate increases, saying it would respond to inflation pressures - especially among services firms - that were more persistent than expected.
Reporting by William Schomberg; Editing by Toby Chopra
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.