by William Schomberg
LONDON, Feb 3 (Reuters) – Britain’s services sector started the year at its slowest pace in two years amid slashing business and consumer spending, final results showed on Friday. S&P Global/CIPS Monthly Survey of Purchasing Managers.
Signs of improvement are emerging, however, for some companies despite the risk of recession mentioned Thursday by the Bank of England (BoE) and suggested by the new PMI figures.
The services PMI index came out last month at 48.7, the lowest since January 2021, a period marked by confinement in Great Britain in the face of the COVID-19 epidemic. In December, it stood at 49.9 and a figure of 48.0 was announced in first estimate in January. The threshold of 50 separates expansion and contraction of activity.
“The latest survey shows the UK economy is at risk of sliding into recession as labor shortages, labor disputes and rising interest rates take their toll,” said Tim Moore, chief executive. Economics at S&P Global Market Intelligence.
However, the further contraction in the services sector is not very pronounced and the volume of new orders has approached the equilibrium threshold while export sales have increased, which is encouraging hiring in the sector.
The headline rate of inflation measuring costs hit its lowest level since August 2021 on the back of lower energy prices, while the outlook for business activity for the current year has risen to their highest level since April 2022.
The BoE, which raised its key rate by half a point on Thursday to 4%, now anticipates a contraction of 0.5% of GDP this year, against -1.5% previously forecast. She added that the recession should run for five quarters, not eight. (Reportage William Schomberg; French version Claude Chendjou, edited by Blandine Hénault)
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