UK services PMI nudges lower in December

The Markit/CIPS services purchasing managers’ index nudged down to 55.5 in December from 55.9 the previous month.

Although the reading remained just above the long-run survey trend level of 55.2, suggesting solid overall growth, economists had been expecting a slightly better print of 55.6.

Chris Williamson, chief economist at Markit, said: “The services sector remained the key driver of the UK’s economic upturn in December, helping to offset the recent weakness seen in manufacturing and putting the economy on the starting block for another year of 2-2.5% growth in 2016.

“The surveys point to the economy having grown 0.5% in the fourth quarter, a solid but perhaps unexciting pace that means GDP would have risen 2.2% in 2015.

“A rosy outlook is by no means assured, however. With business expectations about future workloads dropping to the lowest for almost three years, firms are becoming more cautious in the face of growing uncertainties.”

Williamson said the cost impact of the Living Wage, government spending cuts, a potential hike in interest rates, global economic growth jitters and ‘Brexit’ all pose significant downside risks to this year’s economic growth.

"The relapse in the services PMI adds to evidence showing the recovery lost further momentum towards the end of 2015," said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.