• Prior 53.4
  • Manufacturing PMI 47.3 vs 46.7 expected
  • Prior 46.2
  • Composite PMI 52.5 vs 52.2 expected
  • Prior 52.1

The pound is getting a slight lift on this report here as it reaffirms a continued bounce in UK economic activity, particularly in services, to start the year. The headline reading is a 9-month high with the manufacturing reading being a 8-month high. Of note, employment conditions are also holding up so that's a positive. In short, that means the BOE is afforded more room to keep rates higher for longer. S&P Global notes that:

“UK business activity growth accelerated for a third straight month in January, according to early PMI survey data, marking a promising start to the year. The survey data point to the economy growing at a quarterly rate of 0.2% after a flat fourth quarter, therefore skirting recession and showing signs of renewed momentum.

“Businesses have also become more optimistic about the year ahead, with confidence rebounding to its highest since last May. Business activity and confidence are being in part driven by hopes of faster economic growth in 2024, in turn linked to the prospect of falling inflation and commensurately lower interest rates.

“However, the surprising strength of growth in January, which has exceeded forecasts, may deter the Bank of England from cutting interest rates as soon as many are expecting, especially as supply disruptions in the Red Sea are reigniting inflation in the manufacturing sector. Supply delays have spiked higher as shipping is re-routed around the Cape of Good Hope, the longer journey times lifting factory costs at a time of still-elevated price pressures in the service sector. Inflation is therefore indicated to remain stubbornly higher in the 3-4% range in the near future.”