At 50.6, the final PMI composite index for January was some 0.3 points below the flash estimate and 0.2 points above December's final. This signals a slight expansion of business activities compared to December. Employment fell the sharpest since November 2020, since the pandemic job loss has not been this steep since the financial crisis over 15 years ago. Lower workforces illustrate lower demand as businesses try to lower payroll costs. Input price inflation also hit an 18-month high.

The service sector index rose to a final 50.8, down 0.4 points versus the flash estimate and down 0.3 points from December's 51.1. This signals slight expansion; however, it also posts joint-lowest in 15 months (equal to that of November 2024). Demand declined and new work decreased due to weak consumer confidence, cost cutting and risk aversion among clients as well as delayed investments. This is possibly due to lowered business confidence among clients after the Autumn Budget as well as the incoming increase in employer's National Insurance contributions. Staff numbers in the sector fell for the fourth consecutive month and at the fastest rate since January 2021. Business optimism remained subdued, reaching its lowest since December 2022.

The Services Purchasing Managers' Index (PMI) provides an estimate of service sector business activity for the preceding month by using information obtained from a representative sector survey incorporating transport and communication, financial intermediation, business services, personal services, computing and IT and hotels and restaurants. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) activity versus the previous month and the closer to 100 (zero) the faster is activity growing (contracting). The data are compiled by the Chartered Institute of Purchasing and Supply (CIPS) and S&P Global.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the ISM non-manufacturing index in the U.S. and the S&P Global PMIs elsewhere, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.

The S&P Global PMI services data give a detailed look at the services sector, how busy it is and where things are headed. The indexes are widely used by businesses, governments and economic analysts in financial institutions to help better understand business conditions and guide corporate and investment strategy. In particular, central banks in many countries use the data to help make interest rate decisions. PMI surveys are the first indicators of economic conditions published each month and are therefore available well ahead of comparable data produced by government bodies.