UK services sector growth grinds to a halt in January

UK services sector growth nearly ground to a halt at the start of 2019 amid the first decline in incoming new work since July 2016, in the immediate aftermath of the Brexit vote, the results of the most widely-followed survey for the sector revealed.

IHS Markit's services sector Purchasing Managers' Index dropped from a reading of 51.2 in December to 50.1 for last month, falling well short of economists' forecasts for a reading of 50.9 and hitting its second-weakest reading since December 2012 in the process.

Worries about the economic outlook were also a drag on staffing levels, which fell for the fist time in six years, the survey compiler said.

"The latest PMI survey results indicate that the UK economy is at risk of stalling or worse as escalating Brexit uncertainty coincides with a wider slower slowdown in the global economy," said Chris Williamson, chief business economist at IHS Markit.

"The survey results indicate that companies are becoming increasingly risk averse and eager to reduce overheads in the face of weakened customer demand and rising political uncertainty. Such worries were in turn most commonly linked to heightened Brexit anxiety, though wider global political and economic factors were also seen to have been taking their toll on demand."

The 50.0-point level on the PMI marks the threshhold between expansions and contractions in activity within the sector.

Significantly, Tuesday's PMI numbers arrived the day before rate-setters at the Bank of England were set to meet to decide on policy.

It also came just a day after a construction sector PMI had revealed a big slowdown in activity in that sector, with companies citing delays to client decision-making due to Brexit uncertainty as a "key source of anxiety".

Similarly, the most recent factory sector PMI, published on 1 February, had shown staffing levels being pared for just the second time since mid-2016, although ongoing signs of the slowdown on the Continent had also played a hand, with that combination of factors having led IHS Markit to warn of the risk that manufacturing in Britain might be set to fall into a recession.

As of 1000 GMT, the pound was little changed versus the euro, edging up by 0.01% to 1.1400 but off an intra-session high of 1.1428. Versus the US dollar it was dipping 0.14% to 1.3019.