Investing.com - Activity in the UK service sector decreased last month, according to a closely watched business survey released on Monday.
The IHS Markit/CIPS services purchasing managers’ index (PMI) fell to 53.0 in January, compared to forecasts for a reading of 54.1.
The prior month’s reading was 54.2.
On the index, a level above 50.0 indicates expansion in the industry, below 50.0 indicates contraction.
The research group indicated that services output rose at its slowest pace since September 2016, while new order growth was weaker than the 2017 average.
“Price pressures remain elevated, but wane as costs show smallest rise for 16 months,” the report showed.
“The softer service sector growth follows news of the manufacturing upturn losing momentum at the start of the year and a near-stagnant construction sector,” IHS Markit chief economist Chris Williamson said.
“All together, the PMI surveys point to the slowest pace of expansion since August 2016,” he noted.
Williamson indicated that the January number suggest that growth would slow to just 0.3% from the fourth quarter reading of 0.4% to 0.5%.
“The January slowdown pushes the all-sector PMI into dovish territory as far as Bank of England monetary policy is concerned, historically consistent with a loosening bias,” Williamson explained.
“With the survey also indicating weaker upward price pressures, the data therefore cast doubts on any imminent rise in interest rates,” he concluded.