Investing.com - Activity in the U.K.’s dominant service sector slowed in January, according to data released on Wednesday, but growth remained solid, indicating that the economic recovery is on track.
Markit said the U.K. services purchasing managers’ index for January came in at seven-month low of 58.3, down from 58.8 in December. Analysts had expected the index to tick up to 59.0.
The reading remained well above the 50 level that separates growth from contraction, as the sector expanded for the thirteenth successive month.
The report said new business levels fell but employment growth accelerated at the start of the year and business confidence rose to its highest level in almost four years.
“Even with the easing seen in January, the sector is still expanding at a rate that bodes well for another strong GDP reading in the first quarter. Taken together, the three PMI surveys are signaling quarterly GDP growth of 0.8%,” said Chris Williamson, chief economist at survey compilers Markit.
The report showed that price pressures for service firms picked up only slightly in January.
“The survey also suggests that inflationary pressures and wage growth remain muted, which provides policymakers with extra leeway to keep policy loose for longer while the economy continues its recovery,” Williamson added.
The Bank of England is to begin its two-day policy meeting on Wednesday. The Bank is expected to leave bank rates on hold at 0.5%, but the decision will be closely watched in case it updates its forward guidance on rates.