Although industries are affected by the Red Sea, UK services companies are growing faster

This month has witnessed another uptick in growth for British services businesses, contributing to the slow but steady revival of the economy. However, a study revealed that struggling manufacturers are now being negatively impacted by the inflationary effect of Red Sea tensions.

In the lead-up to next week's interest rate meeting, the Bank of England will probably be reassured by Wednesday's business inventory report that overall inflation pressure is receding. However, it may also strengthen the argument for reducing borrowing costs gradually.

The S&P Global/CIPS UK Composite Purchasing Managers' Index (PMI) preliminary reading for manufacturing and service companies increased to 52.5 in January, the highest level in seven months, from the final reading of 52.1 in December.

The PMI's headline indicator for services companies increased from 53.4 in December to 53.8, an eight-month high.

Manufacturing shrank even though the rate of decline slowed somewhat to 47.3 from 46.2, the lowest point since April of last year near the no change level of 50.0.

Due to ships' rerouting away from the Red Sea, which increased freight prices and caused delivery times to increase for the first time in a year, factories reported the first increase in input costs since April. However, manufacturers' price increases were quite slight.

(Sources: investing.com, reuters.com)