Services business index rises to 51.7 in January

Javier Howell
February 6, 2018

The Caixin China General Manufacturing Purchasing Managers' Index (PMI) came in at 51.5 last month, unchanged from that in December, which was the highest reading since August.

Although the index dipped, it remained above the 50 level that indicates growth.

Chris Williamson, chief business economist at IHS Market, said: "A slowdown in the service sector comes as a disappointment, though was partially offset by faster manufacturing growth during the month".

Samuel Tombs, chief United Kingdom economist at Pantheon Macroeconomics, examined the data's relevance to the Bank of England's current interest rate policy stance.

First, last Thursday, IHS Markit's manufacturing PMI was below expectations, with Rob Dobson, a director at the data firm saying that "the United Kingdom manufacturing sector reported an unwelcome combination of slower growth and rising prices at the start of 2018".

United Overseas Bank (Malaysia) Bhd senior economist Julia Goh said the improved PMI reading for Malaysia is in tandem with the gains across most regional PMI readings in January. Input prices rose at their slowest pace since September 2016. "Demand for transport and communication services was down for the second straight month". Both service providers and manufacturers registered a further increase in new business in January amid reports of firmer client demand.

He added that the latest readings were consistent, on historical patterns, with GDP slowing to 0.3 per cent in the first quarter of 2018, down from the official estimate of 0.5 per cent growth in the final quarter of 2017.

The composite PMI in the Eurozone - which combines all the major sector's PMI surveys -rose to 58.8 in January from December, above the consensus and initial estimate, 58.6.

Despite the slowdown, business confidence is at its strongest since last March, with firms still optimistic that business activity will be higher over the course of 2018.

Price pressures also continued to build, which will bolster the position of the Bank of Japan that inflation is slowly moving to its long elusive 2 percent target after years of massive monetary stimulus.

Other reports by Insurance News

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