Latest data released by Markit/CIPS - 5 February 2020
- Composite PMI 53.3 vs 52.4 prelim
The preliminary report can be found here. That's the highest headline print in the services reading since September 2018 as post-election sentiment boosts economic activity to kick start the new year for the UK.
Of note, there was a robust improvement in order intakes, with the rate of new business expansion accelerating to its strongest since June 2018. Markit notes that:
"January's PMI surveys give a clear signal that the UK economy has picked up since the general election, as a diminishing headwind from political uncertainty translated into rising business and consumer spending. We maintain our nowcast of UK GDP rising by approximately 0.2% in the first quarter of 2020, which represents an improvement on the sluggish conditions seen at the end of last year.
A solid return to growth in the service sector was the main factor behind the recovery in the UK economy, with survey respondents commenting that a rebound in sales enquiries had quickly translated into rising workloads so far this year.
Signs of greater willingness to spend and renewed positivity about the domestic economic outlook has helped lift service providers' growth projections to the highest for just under five years. However, this sub-index was the only measure in the final UK Services PMI dataset to drop since the earlier 'flash' estimate, which may suggest that business expectations tailed off towards the end of the month.
With the vast majority of PMI survey data collected prior to 23rd January, we've yet to see any overall impact on business conditions from the Wuhan coronavirus outbreak, but disruptions to global supply chains and international travel could present risks to the UK economy and key trading partners in the coming months."
The pound has moved higher on the back of the report release with cable now rising to a session high of 1.3070 as this reaffirms more solid economic sentiment that could push back expectations of BOE rate cut this year.
