Services business index rises to 51.7 in January

Feb 06, 2018, 13:41
Services business index rises to 51.7 in January

The Markit/Nikkei Japan Services Purchasing Managers Index (PMI) rose to 51.9 on a seasonally adjusted basis, from 51.1 in December.

"The softer service sector growth follows news of the manufacturing upturn losing momentum at the start of the year and a near-stagnant construction sector", said Chris Williamson, economist at IHS Markit.

"That said, the overall performance of the service sector remained weaker than the long-run growth trend", Dodhia said.

However, the Nikkei Composite Output Index fell to 52.5 in January from 53 in December, reflecting the muted growth in manufacturing activities.

Monday's data completes a hat-trick of worse than forecast PMI surveys for the three major sectors of the British economy.

GETTYThe index from IHS Markit was expected to inch higher from 54.2 to 54.3, but instead dropped to 53.

Recent strong economic data boosted hopes that the Bank of England (BoE) would be pressured into raising interest rates again in the near-term, but this month's trio of below-forecast PMIs has derailed upbeat hopes for the United Kingdom economy and softened the chances of interest rate hikes this year.

The poor reading from the service sector follows equally disappointing results at the end of last week from the manufacturing and construction indices and suggests overall that the United Kingdom economy entered 2018 on a weak footing.

But Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group, a subsidiary of Caixin Insight Group, suggested that downside risks remain due to signs of moderating demand for manufactured products and rising costs that weigh on service companies.

He added that the latest readings were consistent, on historical patterns, with GDP slowing to 0.3 per cent in the first quarter of 2018, down from the official estimate of 0.5 per cent growth in the final quarter of 2017.

Of the new work that businesses were able to attract in January, growth was chalked up to 'successful marketing campaigns, ' greater market shares and new services offerings.

He said: "The data should prompt investors to reassess their view that the chance of the Bank raising interest rates again as soon as May is as high as 50%". Business confidence rises to the levels of March 2017.

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