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05 Feb, 2024 11:09 05 Feb, 2024 11:10

UK services growth hits eight-month high in January

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The UK services sector grew in January at its fastest pace in eight months, according to a survey released on Monday.

The S&P Global services purchasing managers’ index ticked up to 54.3 from 53.4 in December, coming in above the 50 mark that separates contraction from expansion for the third month in a row. It was also above the first estimate and consensus expectations of 53.8.

The composite PMI - which measures activity in the services and manufacturing sectors - rose to 52.9 in January from 52.1. This was above the first estimate and consensus of 52.5 and marked the highest reading since May 2023.

Tim Moore, economics director at S&P Global, said: "The revival in UK service sector performance gained momentum at the start of 2024, with output growth accelerating to its fastest for eight months amid stronger business and consumer spending. New orders have also rebounded this winter as receding recession risks and looser financial conditions led to greater willingness-to-spend among clients.

"Inflationary pressures subsided during January, despite stronger demand conditions. Latest data indicated that total input costs increased at one of the slowest rates seen in the past three years. Softer cost inflation reflected lower energy and fuel costs, alongside falling raw material prices."

Moore said a combination of falling inflation and improving order books provided a strong boost to business activity expectations across the service economy.

"The degree of optimism regarding year ahead growth prospects was the highest since April 2023. Another uplift in business confidence in January provides a signal that elevated levels of geopolitical uncertainty have yet to exert much of a constraint on service sector growth projections for 2024," he said.


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