"The stronger than expected growth since the Brexit vote has been entirely due to much stronger than expected household consumption growth. It won’t last". – Daniel Vernazza, UniCredit
The services sector activity in Britain slowed unexpectedly during the first month of 2017, a private survey revealed on Friday. Markit/CIPS reported its Purchasing Managers’ Index for the UK services sector fell to 54.5 points in January after hitting 56.2 in December, the highest level since July 2015, when it climbed to 57.4. Market analysts anticipated a slighter decrease to 55.8 in the reported month. Last month’s reading recorded the first slowdown in the UK services industry in four months. However, it remained comfortably above the 50-point level separating expansion from contraction. Britain’s service industry is closely monitored, as it accounts for almost 80% of the economy. According to the Markit Services PMI survey, companies expressed greater optimism about the future of the services sector. Nevertheless, businesses once again pointed to rising inflationary pressures due to the sharp fall in the value of the Sterling. The weak domestic currency is likely to push inflation to 2.7% in 2018, above the Central bank’s target of 2%, the BoE Governor Mark Carney said on Thursday. Although the Bank said its tolerance for above-target inflation would be limited. After the release, the Pound dropped markedly against other major currencies, trading at 1.1630 against the Euro and 1.2494 against the US Dollar.