Despite supply chain disruption that weakened business activity in the manufacturing sector in February, the U.K. services sector experienced a modest growth during the month.
The Services PMI grew at 54.5 in February, up from the 16-month low of 53 recorded in January, according to the IHS Markit report released on Monday. Business activity rose at the fastest pace in four months and the sector recorded the strongest upturn in new work since the first half of 2017.
Chris Williamson, Chief Business Economist at IHS Markit, which compiles the survey: “The service sector overtook manufacturing as the fastest growing part of the economy for only the second time since the referendum in February, thanks to the combination of the largest rise in services activity for four months and waning growth of factory output.”
Employment in the sector rose to its highest in five months, aided by the stronger than expected sales and growing business activity. The U.K services sector remained resilient despite headwinds and higher consumer prices.
Improved global economy amid weaker pound is supporting exports but rising prices and lackluster wage growth are still hurting local demand.
Duncan Brock, Director of Customer Relationships at the Chartered Institute of Procurement and Supply, said: “A complex array of forces were at play in the UK services sector last month resulting in the fastest rise in new orders since May 2017 but also hindered by continued consumer caution over spending.”
The pound rebounded slightly against the Japanese Yen following the report but we remained bearish on GBPJPY pair as long as 146.81 resistance holds.
