UK ser­vices firms start to crack as risks mount

The Pak Banker - - MARKETS/SPORTS -

Con­fi­dence at UK ser­vices com­pa­nies fell to the low­est in three years last month as a mount­ing litany of threats took their toll. While Markit Eco­nom­ics said on Wed­nes­day that its head­line ac­tiv­ity in­dex for the sec­tor rose in Jan­uary, in­di­ca­tors of sen­ti­ment and or­der back­logs mean there's lit­tle rea­son for op­ti­mism.

The re­port comes a day be­fore the Bank of Eng­land an­nounces its lat­est pol­icy de­ci­sion. Econ­o­mists fore­cast that it will leave the key in­ter­est rate at a record low and cut its neart­erm growth and in­fla­tion pro­jec­tions. While the econ­omy is grow­ing, risks from China's slow­down and the up­com­ing ref­er­en­dum on Euro­pean Union mem­ber­ship have cast a pall over the out­look.

"Cracks con­tinue to ap­pear in the coun­try's re­silience to the var­i­ous head­winds," said Chris Wil­liamson, chief econ­o­mist at Markit. He cited "wor­ries about a Chi­nese hard land­ing, fi­nan­cial­mar­ket jit­ters, higher in­ter­est rates in the U.S., more aus­ter­ity at home and the pos­si­bil­ity of 'Brexit."' The ser­vices Pur­chas­ing Man­agers In­dex rose to 55.6 in Jan­uary from 55.5 in De­cem­ber, de­fy­ing econ­o­mists' pre­dic­tions for a de­cline to 55.4.

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