The latest PMI surveys indicate that the UK economy stalled atthe start of the year as intensifying Brexit worries led to anincreasingly broad-based malaise. The survey results indicate thatcompanies have become increasingly risk averse and eager to reduceoverheads in the face of weakened customer demand and risingpolitical uncertainty.
Such a subdued start to the year, combined with worrying signsof global economic weakness, suggest economic forecasts for growthin 2019 are likely to be revised lower.
Service sector growth ground almost to a halt in January,matching similar disappointing news in the manufacturing andconstruction sectors. The triple-whammy of weaker surveys pushedthe IHS Markit/CIPS 'all-sector' PMI down to 50.3 in January from51.5 in December. The latest reading is the lowest since December2012 with the sole exception of July 2016, when the economystumbled momentarily after the Brexit vote.
The further deterioration in January from already subdued growthat the end of last year means the past three months have seen theeconomy slip into its weakest spell for six years. Comparisons ofthe PMI with official data indicate that GDP likely stagnated atthe start of 2019 after eking out modest growth of just 0.1% in thefourth quarter.