- Chris Williamson, the chief economist at Markit
The British dominant services sector continued to expand in January, albeit concerns about financial market turbulence and the possibility of "Brexit" pushed business morale to the lowest level in three years. The Markit/CIPS services PMI climbed to 55.6 last month, up from 55.5 in December, beating expectations for a decline to 55.3. Nevertheless, the reading remained below its average of 57.2 recorded in the three previous years. The survey's findings were mixed, as new business rose at the fastest pace since July, whereas output growth was weaker compared with the three-year average trend rate and the mood among companies was gloomy. The data came ahead of the Bank of England's "Super Thursday", when the central bank will reveal its latest interest rate decision, monetary policy stance as well as the Inflation Report. The overwhelming majority of economists expect the central bank to remain pat, while traders on money markets pushed back their expectations to early 2018.
The UK's economy, which relied on the services sector to boost growth at the end of last year, is likely to grow 0.6% in the first quarter of 2016, gathering a bit of speed from estimated growth of 0.5% in the December quarter. The National Institute of Economic and Social Research forecast the economy to grow by 2.3% this year.
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