USA services sector rebounds in January

Markit chief business economist Chris Williamson said: "Service sector growth eased after a strong end to 2016, but the January surveys still point to a buoyant start to 2017 for the United Kingdom economy".

Companies reported higher fuel and labour costs and said they had to pay more for imports because of the pound's sharp fall since the referendum.

Hong Kong's January PMI signals contraction

The Eurozone economy kicked off the year with solid gains in private sector activity, according to PMI data from IHS Markit, with growth holding at its best pace in at least five and a half years.

A PMI reading above 50 indicates an expansion in manufacturing activity, while a reading below that points to a contraction. Markit say that the Jan numbers still show positive signs and could put the United Kingdom on course for 0.5% growth in Q1.

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Activity in the United States services sector hit a 14-month high in January, according to data released on Friday.

"The degree to which costs are rising threatens to test the tolerance of some policymakers [at the Bank of England] in terms of their willingness to "look through" what's likely to be a marked upturn in inflation in 2017", said Chris Williamson, chief business economist at IHS Markit.

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New business rose for the sixth consecutive month, despite dropping off from December's levels, while o utstanding business fell for the first time in three months, the PMI report said. That would compare with an official estimate that GDP expanded 0.6% in the final quarter of 2016.

"The main area of concern is the extent to which companies" costs are rising across the economy, with the rate of inflation accelerating to a pace not seen since before the global financial crisis'.

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The Bank of England upgraded its GDP growth forecast for 2017 on Thursday to 2 per cent, up from 1.4 per cent previously.


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