Up to now, the surveys were looking so promising. Then the latest purchasing managers index tracking UK services came along, and spoilt it all.
In fact, it was a hat-trick of falls. The purchasing managers' index (PMI) tracking manufacturing out on Wednesday was good, with one sub-index tracking output at a 30-month high, but the overall index fell a tad on the month before.
Yesterday, we had the latest PMI for construction, that fell, dropping to the lowest level since September, although it did point to strong growth in job creation.
Then, this morning, we had the PMI for services, the most important sector within the UK economy. The Business Activity Index fell to 54.5 – consistent with the weakest rate of expansion in three months. The reading was below the survey average, with the data going back 20 years.
So how worrying is the fall?
Chris Williamson, Chief Business Economist at IHS Markit, which compiles the survey, said that ”the January surveys still point to a buoyant start to 2017 for the UK economy.”
In fact, collectively, the three indexes point to quarterly growth of 0.5 per cent, which would be an okay (ish) performance.
Meanwhile, input price inflation rose to its highest level since 2011. The output price index was unchanged at December’s 68-month high. Samuel Tombs, Chief UK Economist at Pantheon Macroeconomics warned that: "it [is] likely [it] will rise further, given that input price inflation intensified in January.”
Scott Bowman, UK Economist at Capital Economics suggested that 2017 may see more balanced growth. He said, and that while services sector growth may slow "the manufacturing sector should continue to receive support from the lower pound.” He continued: “This should prevent overall GDP growth from slowing too much in 2017, with our forecast for the year as a whole of 1.8 per cent only slightly below the 2 per cent recorded in 2016.”