Service sector growth slows

The survey by data company Markit also showed a pick-up in price pressures for service firms, but not to a level that would indicate a problem for Bank of England policymakers.

The speed of Britain’s recovery has prompted speculation about the timing of a rate rise, but policymakers have said the Bank is in no hurry to raise interest rates as inflation has fallen to its target and wage growth remains subdued.

Markit’s services purchasing managers’ index (PMI) eased to 58.3 in January – its lowest since June – from 58.8 in December and below a forecast of 59.0 in a survey.

Dr Claudia Colicchia, lecturer in logistics and supply chain management at Hull University Business School, said yesterday: “Besides an evident pick-up in price pressures for service firms in the last few months, it can be argued the service industry is even more likely to be negatively affected by the general economic downturn in Europe and by the mood of uncertainty and lack of confidence that these tough times generate...

“It is to be hoped that the Bank of England keeps its promise and gives some oxygen to the economy (by) avoiding an immediate rise of interest rates.

“This would generate a virtuous cycle from which the service sector would, in turn, benefit in the medium term.”

Economist turns spotlight on Bank’s forward guidance: Page 3