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Thursday 04th of February 2010
February 3, 2010    

UK services sector activity dips in January

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by Kay Murchie

The key services sector slowed in January as a result of bad weather and the VAT rise, according to analysts.

The latest activity index from the Chartered Institute of Purchasing and Supply (CIPS)/Markit PMI showed a reading of 54.5 in January from the 56.8 in December - however, any reading above 50 indicates growth.

The reading was less than analysts expectations of 56.5.

The figures differed to the manufacturing sector after the CIPS/Markit manufacturing PMI revealed UK manufacturing activity rose at its fastest rate in 15 years in January.

Furthermore, the CIPS/Markit PMI revealed positive data within the construction sector with a rise to 48.6 in January, up from 47.1 the previous month - the smallest fall in activity during the current 23-month period of contraction. Furthermore, this index is heading towards the crucial 50 mark.

In the meantime, commenting on today’s services sector figures, Alan Clarke, UK economist at BNP Paribas, said: “It is surprising that manufacturing managed to shrug off the snowy weather while the services sector took such a hit.”

However, he remained positive and added that: The report does suggest that the snow was to blame which means the setback could be temporary.”

Many companies blamed January’s severe snowfall for the decline in new business. The hotels and restaurants sector was hit particularly hard as roads were blocked.

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