UK services PMI drops to 5-month low in Feb, misses estimates

The services sector activity in the UK economy deteriorated for the second month in a row in February, a fresh report from Markit Economics showed on Friday.

The services PMI fell to 53.5 in Feb versus a 54.5 reading booked in Jan. Markets predicted a drop to 54.2 last month.

Key Points:

Business activity expands at slowest pace since September 2016

Softer rise in new work, but business optimism remains strong

Input cost inflation reaches an eight-and-a-half year high

Chris Williamson, Chief Economist at Markit, noted: “A further slowdown in UK business activity growth in February adds to evidence that the economy has lost momentum after the impressive expansion seen at the end of last year. The PMI surveys are collectively signalling GDP growth of 0.4% in the first quarter. “Weaker consumer spending was a key cause of slower service sector growth, suggesting that household budgets are starting to crack under the strain of higher prices and weak wage growth.”