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UK services output and consumer savings ratio fall

Staff Writer |
Worrying signs for the UK economy emerged as data showed the key services sector declined in January.

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The savings ratio fell to the lowest on record, which is likely to hit national growth and keep interest rates at rock bottom for a while yet.

The index of services fell by 0.1% month-to-month in January, the Office for National Statistics revealed, when a 0.2% increase had been expected by the market after December's 0.2% rise.

January also saw industrial production dropped 0.5% and construction output by 0.2%.

For the three months to January growth in the index of services slowed to 0.6% from the previous 0.8%, and short of the 0.7% consensus forecasts.

ONS also confirmed GDP growth from the fourth quarter of 2016 was unrevised at 0.7%.

The GDP news was slightly disappointing given the prior upgrades to the production and manufacturing data, said Martin Beck, senior economic advisor to the EY ITEM Club, but he though the services index decline was of greater importance as it showed a noticeable loss of momentum through the fourth quarter.

After the fall in the services index, Pantheon Macroeconomics said its monthly GDP index model showed a decline of 0.2% for January.