UK growth faces ‘slow puncture’ as services PMI soften

UK services activity has softened in January with business and employment growth weakening while input prices have risen sharply.

PMI figures retreated to 54.5 from 56.2 in December. Services have been a key driver for the UK economy, alongside the consumer, following Brexit.

“While these are surveys rather than hard data and not too much should be read into one month’s figures, it nevertheless fuels our suspicion that the UK economy will find life increasing difficult during 2017 and that growth will gradually lose buoyancy like a slow puncture,” says IHS Markit chief economist for the UK and Europe Howard Archer.

IHS Markit predicts UK growth will be 1.5 per cent, while inflation will rise to 3 per cent.

The PMI report showed services companies raising their prices at the equal fastest rate since April 2011.

fuel, salaries, freight charges and imports saw import prices rise at their largest rate since March 2011.