U.K. Services Grow 0.3% in January, Fastest Pace in Five Months

Photographer: Chris Ratcliffe/Bloomberg

Distribution, hotels and restaurants stagnated, partly held back by heavy snowfall across much of Britain during the month. Close

Distribution, hotels and restaurants stagnated, partly held back by heavy snowfall... Read More

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Photographer: Chris Ratcliffe/Bloomberg

Distribution, hotels and restaurants stagnated, partly held back by heavy snowfall across much of Britain during the month.

Britain’s services industries expanded in January, indicating some strength in the economy at the start of the first quarter as the U.K. fights to avoid an unprecedented triple-dip recession.

Services, which account for about three quarters of the economy, rose 0.3 percent from December, when they dropped 0.4 percent, the Office for National Statistics said in London today. That’s the biggest increase since August. In the quarter through January, services fell 0.2 percent from the previous three months.

The growth in January was led by transport, storage and communications, which rose 1.3 percent, as well as government and business services. Distribution, hotels and restaurants stagnated, partly held back by heavy snowfall across much of Britain during the month.

In a separate release today, the statistics office said output per worker fell 0.8 percent in the fourth quarter, while output per hour declined 0.5 percent, a sixth consecutive quarterly fall. Unit wage costs increased 0.5 percent on the quarter and 2.4 percent from a year earlier.

Data yesterday showed disposable income fell in the fourth quarter as gross domestic product dropped 0.3 percent, underlining the pressure on the economy. Further cold weather this month after the snow in January has increased concern of another contraction. The initial estimate of first-quarter GDP is due to be published on April 25.

From a year earlier, services rose 0.8 percent in January, the statistics office said. In the three-month period, they were up 0.9 percent on the year.

The ONS also published a report estimating the impact on inflation from tax changes in Chancellor of the Exchequer George Osborne’s budget on March 20. The measures will add 0.14 percentage point to the one-month consumer-price inflation rate. The 12-month rate will be lower by 0.12 percentage point, because the impact of measures announced in the previous year’s budget were larger, it said.

To contact the reporter on this story: Scott Hamilton in London at shamilton8@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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