-Chris Williamson, Markit Chief Economist
After growing at the slowest rate in more than a year, the UK services sector experienced a faster expansion last month, beating expectations of 56.6 and easing concerns of the British economy's prospects. The Services PMI in the UK increased much more than anticipated, from a 17-month low of 55.8 in December 2014 to 57.2 index points in January 2015. Employment in the UK has also risen approximately 70,000 new jobs per month, thus increasing the Services PMI's employment index by more than two index points to 57.1.
The British composite PMI, which combines data from construction, services and manufacturing sectors, showed signs of strength, edging up 1.4 index points to 56.9 last month. A lot of companies have expectations of positive business plans for 2015, as business confidence remained quite steady. Inflation on input prices declined to the lowest level since 2009, while output price inflation dropped to a marginal rate. That data will cheer up Prime Minister David Cameron, who hopes the UK economic recovery will persuade voters to grant him to power in a national election on May 7. The first estimate of the December quarter GDP suggested the economic growth decelerated to 0.5% from 0.7% in the preceding three months. However, the headline quarterly GDP figure is a subject to revisions as the first estimate is based only on less than 50% of the data available and included only the output measures of GDP.
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