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Roundup: British service PMI rises in Jan., economic growth intact

Xinhua, February 4, 2015 Adjust font size:

British services sector purchasing managers' index (PMI), a gauge measuring the industry activity rose significantly to 57.2 in January 2015 from 55.8 in December 2014, said Markit Economics Limited Wednesday.

Economists here believe that the rebounce of PMIs in January indicating an intact economic recovery in the first half of this year.

25TH MONTH INCREASE

The latest reading of service industry was also well above the market estimates consensus of 56.4, and it marked the 25th successive month that the activity index staying above the 50.0 no-change mark.

British services sector started 2015 in a strong fashion as activity and new business both increased at accelerated and above survey average rates, said the London-based survey compiler.

Meanwhile, input price inflation eased to the lowest since June 2009 during January, while business confidence remained steady, with nearly 50 percent of the survey panel forecasting an increase in activity from present levels in 12 months' time, said Markit.

Chris Williamson, Chief Economist at Markit, said:" The January PMI surveys signaled a reassuringly robust start to the year for the UK economy, indicating a quarterly rate of GDP growth just over 0.5 percent."

More encouragingly, the surveys are currently signaling an impressive net rate of job creation of some 70,000 per month, said Williamson.

CONTINUING GROWTH

Economists here cite the oil price slump and the consequent real income and consumption growth of British households as the main reason supporting the companies' confidence and economic growth prospect.

Martin Beck, senior economic adviser to the EY ITEM Club, commented in a note that:" Looking ahead, the services sector should increasingly benefit from the collapse in the oil price which, if maintained, will provide a significant boost to consumers' discretionary spending power."

The London-based economic think tank estimates that the growth in services output in the first quarter would at least equal the 0.8 percent quarter on quarter expansion achieved at the end of last year.

Samuel Tombs, Senior UK Economist at Capital Economics, said that the latest data provided further reassurance that British economy is not on the cusp of a renewed slowdown, on contrast, the recovery could gain even more pace over the coming months.

He estimates a 0.7 percent quarterly gross domestic product (GDP) growth in the first quarter of 2015.

The services sector dominates the UK economy, contributing around three quarters of GDP, according to the Office of National Statistics (ONS). Endit