skip to main content

UK services sector weaker in January, 1.8% GDP confirmed

Cinemas were among the areas seeing the biggest declines, slumping by 8.3% after UK moviegoers stayed at home after watching major blockbusters over the Christmas period
Cinemas were among the areas seeing the biggest declines, slumping by 8.3% after UK moviegoers stayed at home after watching major blockbusters over the Christmas period

Britain's powerhouse services sector saw output drop in January, as British moviegoers hung back after Christmas.

The UK’s Office for National Statistics (ONS) said month-on-month services output fell by 0.1% in January, following a rise of 0.2% in December.

Economists had been expecting another 0.2% rise.

Cinemas were among the areas seeing the biggest declines, slumping by 8.3% after UK moviegoers stayed at home after watching major blockbusters over the Christmas period.

It contributed to an overall 1.2% fall in transport, storage and communication activity, while distribution, hotel and restaurant services output fell 0.7%.

Separate figures from the ONS showed that gross domestic product (GDP) expanded by 0.7%, in its final estimate of fourth quarter growth, matching its previous estimate but still surpassing initial readings of 0.6%.

Darren Morgan, the ONS head of GDP, said: "Growth in the final quarter remained unrevised at 0.7%, with buoyant contributions from the retail and wholesale sectors in the run-up to Christmas.

"Services dropped slightly in January with weak performances from hotels and the motor trade.

"However, the long-term picture is still one of robust growth."

Annual GDP growth between 2015 and 2016 was confirmed at 1.8%.

Quarterly growth was driven by "strong" consumer spending and output in consumer-focused industries, the ONS said.

Fresh figures showed that household spending grew by 0.7% between October and December, thanks in part to a 1.3% rise in housing.

It came amid a jump in home energy costs, with mains gas and liquefied petroleum gas (LPG) spending rising 22.7%.

A handful of energy suppliers have introduced price hikes in recent months, prompting calls for potential price caps to safeguard consumers.