UK PMI Services was finalized at 53.9 in January, up from 50.0 in December. PMI Composite rose to 53.3, up from 49.3, back in expansion region for the first time since last August. Markit noted there was robust and accelerated increase in new orders. Growth expectations also continued to improve.

UK PMI composite finalized at 53.3,

Tim Moore, Economics Associate Director at IHS Markit, which compiles the survey:

“January’s PMI surveys give a clear signal that the UK economy has picked up since the general election, as a diminishing headwind from political uncertainty translated into rising business and consumer spending. We maintain our nowcast of UK GDP rising by approximately 0.2% in the first quarter of 2020, which represents an improvement on the sluggish conditions seen at the end of last year.

“A solid return to growth in the service sector was the main factor behind the recovery in the UK economy, with survey respondents commenting that a rebound in sales enquiries had quickly translated into rising workloads so far this year.

“Signs of greater willingness to spend and renewed positivity about the domestic economic outlook has helped lift service providers’ growth projections to the highest for just under five years. However, this sub-index was the only measure in the final UK Services PMI dataset to drop since the earlier ‘flash’ estimate, which may suggest that business expectations tailed off towards the end of the month.

“With the vast majority of PMI survey data collected prior to 23rd January, we’ve yet to see any overall impact on business conditions from the Wuhan coronavirus outbreak, but disruptions to global supply chains and international travel could present risks to the UK economy and key trading partners in the coming months.”

Full release here.

UK PMI Construction rose to 48.4 in January, up from 44.4, beat expectation of 44.9. While that still suggests contraction, it’s the best reading since May 2019. New orders were close to stabilization. There was a boost from receding political uncertainty. Business optimism also rebounded to its highest since April 2018.

Tim Moore, Economics Associate Director at IHS Markit, which compiles the survey:

“The construction sector downturn lost intensity in January amid slower reductions in house building, commercial work and civil engineering activity. Measured overall, the latest dip in construction output was much shallower than in December, with survey respondents often commenting on improved willingness to spend among clients since the general election.

“Commercial work dropped at the slowest pace since the start of 2019 and was the main beneficiary of receding political uncertainty. UK construction companies also commented on signs of a turnaround in demand conditions across the residential development category during January. Civil engineering remained the weakest performing area of construction work as firms across the supply chain cited a lack of opportunities to replace completed contracts.

“Despite concerns about prospects for work on infrastructure projects, latest data revealed a strong rebound in business optimism across the construction sector as a whole in January. The degree of positivity reached its highest level since April 2018, driven by hopes that improving confidence among clients will continue to translate into new contract awards over the course of 2020.”

Full release here.

UK PMI Manufacturing was finalized at 50.0 in January, up from December’s 47.5. New orders, employment and business confidence rose. But new export orders declined for the third consecutive month.

Rob Dobson, Director at IHS Markit, which compiles the survey:

“The start of 2020 saw the performance of the UK manufacturing sector stabilise, as receding levels of political uncertainty following the general election aided mild recoveries in new order intakes, employment and business confidence.

“A strengthened domestic market was the main source of new business. Overseas demand remained disappointing, however, as new export business fell for the third straight month in response to weak economic growth in key markets, notably European.

“Improvements were mostly seen via rising consumer demand and renewed input buying by businesses, suggesting that the reduction in uncertainty following the election has encouraged households and businesses to step up spending. In contrast, an ongoing downturn at investment goods producers suggests that the economic certainty required to achieve a full revival in capital spending may still be some way off, likely reflecting lingering uncertainty about the Brexit road-map in the coming year.”

Full release here.