UK businesses have started 2015 strongly, says report
British firms started the year off surprisingly well according to services PMI data from Markit.
The UK’s economic recovery continues to grow in strength, as highlighted by the latest monthly service sector update from Markit/CIPS. The survey showed the services PMI reading rose higher than forecast to 57.2 in January, up from a 17-month low of 55.8 in December.
As the service sector accounts for over 77 per cent of the UK’s economy, the survey suggests that the British economy as a whole is growing a little above 2014’s fourth quarter GDP reading of 0.5 per cent.
Growth expected to edge higher in Q1
The latest services PMI reading comes not long after updates on the manufacturing and construction sectors where further positive results were recorded, which means the composite index improved to 56.7 in January after falling to a 19-month low of 55.3 in December.
Further good news came from the services PMI employment index, which climbed to 57.1 and recorded a six-month high that matched the second highest reading since records began. This effectively means the job creation rate was around 70,000 in January.
“It looks like the UK economy may well have regained some momentum in January after growth slowed in the final months of 2014,” said Howard Archer, chief UK economist at IHS.
“Overall the purchasing managers’ surveys indicate that the UK economy has made a solid start to 2015, even if growth remains below the peak levels seen around mid-2014.”
Looking ahead, Howard Archer predicted that UK GDP will edge up to 0.6 per cent in the first quarter of 2015.
UK recovery should continue in 2015
Britain’s economic recovery continues to lead the way when compared to the recoveries of its European peers and will lend weight to the government’s assurances that its economic plan is working, especially in the run up to the general election in May.
The general election usually signals a period of dampened economic activity due to the uncertainty that surrounds it, however, economic boosts from the oil price crash should coincide with strong consumer spending and keep economic activity around the same level as it is now.