UK services firms start to crack as risks mount
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.