UK services output rises in January, easing recession fears

LONDON (Reuters) - Britain's services sector grew in January at its strongest pace in five months, official data showed on Thursday, potentially easing concerns that the economy is back in recession.

The Office for National Statistics said service output rose 0.3 percent in January from December, its best performance since August.

On a year-on-year basis, output was up 0.8 percent, the ONS said in a statement.

The data, which feeds into the ONS' calculation of gross domestic product, offers an early glimpse of how the biggest sector of Britain's economy fared in the first quarter.

Previously released data has shown manufacturing output fell in January at the fastest pace since June, heightening fears that the economy made a weak start to the year.

Britain's economy contracted in the last quarter of 2012 and may be in its third recession in less than five years.

Services make up more than three quarters of British GDP and economists were awaiting Thursday's index to get a better sense of whether the country would escape a new recession.

Helping services in January was activity in the transport, storage and communications sector as well as in business services and finance.

Cold weather and snowfall in the month held back trade at some smaller retailers and at pubs and bars, an ONS official said.

A separate survey of Britain's services industry released earlier this month - the Markit/CIPS Purchasing Managers' Index (PMI) - showed that the sector grew at its fastest pace in five months in February.

The ONS said on Thursday that in the three months to the end of January, services output was down 0.2 percent compared with the three months to the end of October when the London Olympics helped the economy. It was the weakest performance under that measure since June.

Separately, the statistics office reported that productivity across all sectors of the economy, as measured by output per hour, fell 0.5 percent in the fourth quarter compared with the third quarter.

Unit wage costs rose 0.5 percent in the October-December period compared with the previous three months.

Source: http://news.yahoo.com/uk-services-output-rises-january-easing-recession-fears-093418366--business.html

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