UK Services Sector Flourishes with Fastest Hiring in Six Months – Reuters

British services businesses began the year on a strong note, with an increase in new orders and the fastest rate of hiring in six months, according to a survey by S&P Global. The services Purchasing Managers’ Index (PMI) for the UK rose to 54.3 in January, its highest reading since May 2023. This growth was fueled by customers’ greater willingness to spend, driven by the prospect of lower interest rates. S&P Global economist Tim Moore highlighted the rebound in new orders, attributing it to receding recession risks and looser financial conditions. However, the picture was less positive in the manufacturing sector, which reported delays due to attacks on shipping in the Red Sea. The composite PMI, which combines both surveys, reached an eight-month high of 52.9 in January, signaling the dominant role of the larger services sector. The Bank of England has forecasted a gradual recovery for the British economy in 2024, but Chief Economist Huw Pill cautioned that rate cuts were unlikely in the near term due to concerns over rising wages and the cost of labor-intensive services. While rising salaries have contributed to increasing costs, overall costs were rising at the slowest rate in three years. At the same time, the survey revealed that prices charged to customers saw the smallest increase in four months, influenced by lower energy and fuel costs, as well as falling raw material prices.