HIS Markit Says UK economy suffered a harsh slowdown in January 2018
According to a survey, it has been revealed that UK’s economy suffered a drastic slowdown in January 2018. Investors believe that as a result of the economic slowdown the Bank of England could increase interest rates in the upcoming months. Britain’s HIS Markit/CIPS purchasing manager’s index (PMI) for most important services slowed down and fell to 53.0 in the start of 2018. In December the index was at 54.2. In a Reuters Poll of economists, the reading was at the lowest end of an array of forecasts. Monday’s report, combined with last week’s poor than expected surveys for construction and manufacturing sectors signal that the 6th biggest economy in the world grew at its slowed pace since the Brexit vote in 2016.
Companies reported the hostile weather, non-renewal of completed contracts and loss of existing customers. They also reported doubt about the result of the Brexit negotiations that face Prime Minister Theresa May this year. HIS Markit’s chief business economist, Chris Williamson said that as far as the Bank of England’s monetary policy is concerned, the economic slowdown in January thrusts all the sectors PMI into dovish terrain. Adding further, Williamson said that as the survey showed weaker rising price pressure, it is doubtful that interest rates will rise.
Bank of England is expected to announce new economic forecasts this Thursday. Meanwhile, investors are waiting for any signals that interest rates could rise in the coming months. In 2017, UK’s economy grew more than expected. Financial markets in the UK have said that chances of an increase in interest rates are 50-50. January’s PMI survey forecasted the economy to grow by a quarterly pace of around 0.3 percent in the first 3 months of 2018. On the other hand, official data shows the Brittan’s economy grew by 0.5 percent in the last 3 months of 2017. This was the fastest pace in 2017. Also, Monday’s survey revealed that there was an increase in job creation and service companies are optimistic about the overall economic outlook.