- Composite PMI 54.2 vs 53.4 prelim
This just reaffirms a slight rebound in demand conditions as constraints from the omicron spread is seen easing in the UK economy to start the new year. However, a negative takeaway is that prices charged inflation hit a survey-record high and that is rather alarming for the BOE. Nearly 1/3 of service providers reported an increase in their average prices charged in January. Markit notes that:
“The latest PMI data provide good news about prospects for the UK economy in 2022 as demand has started to recover from the impact of Omicron restrictions and most businesses expect only a temporary slowdown from cancelled bookings and staff absences at the turn of the year. Growth expectations for the next 12 months picked up in January and are now the highest since last spring, with staff recruitment difficulties often the only major source of anxiety.
"However, record price increases in the service economy are set to add to the cost of living crisis for UK households. Input cost inflation accelerated again in January and service providers responded by increasing their prices charged at the fastest rate since the index began in July 1996. Nearly one-in-three survey respondents reported higher average prices charged than in December, with rising salary payments, energy bills and logistics costs the most commonly cited reasons."
