Service sector figures provide hope that the UK will avoid a triple-dip recession - ITEM Club
Nida Ali, economic advisor to the EY ITEM Club, comments on today’s PMI services figures:
- A reassuring outturn for the services PMI pointing to stronger momentum for the rest of the year
- Today’s figures bode well for overall growth in Q1 and provide hope that the UK will avoid a triple-dip recession
- The Bank of England is likely to sit tight on monetary policy this month
“A reassuring outturn for the services PMI, especially after the weak results of the past few months, which had raised concerns that the sector was running out of steam. The rise in business volumes, confidence and employment are all very encouraging and point to stronger momentum during the rest of the year.
“Growth in output was probably restricted to some extent by the heavy snowfall, suggesting there is potential for activity to strengthen further in February. Today’s figures, coupled with initial signs of a pick-up in the manufacturing sector, bode well for overall growth in Q1 and provide some reassurance that the UK will avoid a triple-dip recession.
“The onset of the new year has brought renewed optimism that a sustained recovery will begin to take hold both in the UK and abroad, and today’s figures support this view. As such, the MPC looks likely to sit tight on monetary policy this week and will wait and see whether these expectations materialise in the coming months.”