Time for a recap:

Britain’s services sector slowed to the brink of stagnation last month. Markit’s monthly service sector PMI dropped to just 50.1%, showing barely any growth at all.

Services bosses reported that they’ve been forced to cut headcount, after suffering weakening new business. Many blamed Brexit uncertainty for spooking clients.

Economists fear that the UK could struggle to post any meaningful growth this quarter, given that construction firms and manufacturers also found January tough.

In another sign of economic anxiety, UK car sales have fallen by 1.6% in January - although electric vehicle sales rose.

The picture isn’t any better overseas. The eurozone private sector is growing at the slowest rate since mid-2013, with France and Italy particularly weak. Growth in Ireland also slowed, while even Australia is feeling the chill.

Despite this gloom, European stock markets have risen steadily today as traders put their recent worries behind them (for the moment, anyway....)

And HMV staff have been learning whether jobs are safe, or not, after Canada’s Sunrise Records saved most of the company from collapse..

There’s lots of media reaction to today’s weak service sector data .

Delphine Strauss of the Financial Times says the slowdown shows that Brexit is biting.

Growth in the UK services sector nearly ground to a halt in the first month of the year, with political uncertainty leading clients to delay decisions on new projects and hold off placing orders.

Over at The Times, Miles Costello flags up that services firms are now cutting jobs, for the first time since 2012.

Britain’s dominant services sector came to a virtual standstill last month as companies began to cut staff numbers for the first time in six years, according to a closely watched survey that has hit the value of the pound.

The latest snapshot index on services compiled by IHS Markit and the Chartered Institute of Procurement & Supply generated a reading of 50.1 in January, down from 51.2 in December and perilously close to the 50 mark that separates growth from contraction.

Bloomberg’s Jill Ward says the UK economy is now at risk of stalling:

The report follows disappointing Markit surveys on manufacturing and construction for January and comes just days before the Bank of England publishes its latest policy decision on Feb. 7. The central bank, which has long warned of the damage from Brexit to investment, will also publish new forecasts for growth and inflation.

The services report showed that new business volumes declined for the first time in 2 1/2 years, employment fell and optimism in the sector was close to the lowest levels in a decade.

James Knightley of ING fears that Britain’s economy could actually be contracting.

Having inspected January’s PMI report, he says:

The UK’s purchasing managers indicator surveys suggests that the economy is stagnating as we approach Brexit day. With no deal in sight, business and consumer caution will only intensify, risking a 1Q contraction.

Knightley blames political uncertainty around Brexit for the slump - it’s deterring companies and individuals from placing new orders.

He explains:

Worryingly, the employment component also dropped into contraction territory and business optimism is near decade lows.

It is clear that business is worried and with the Brexit uncertainty set to continue, the risk is that activity softens further - firms will become increasingly risk averse and implement contingency Brexit planning. With all sectors of the UK economy now feeling pain, it is imperative the government and the House of Commons get a grip on Brexit.

Meanwhile, the case for a Bank of England rate hike this year continues to recede.

Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, says January was a bleak month for services companies.

“The sector had the January blues last month, as employment dropped for the first time in over six years, and new order levels fell into contraction territory.

“At the risk of sounding like a broken record, Brexit uncertainty continues to be at the heart of the malaise as clients delayed orders and consumers were deeply reluctant to spend under the continuing cloud of hesitation, indecision and ambiguity.

“Staff in employment were demanding higher wages which impacted on input price inflation rising again, so there was little respite on offer.

“As optimism levels remained at some of the lowest levels since the last recession in 2009, the vice-like grip of Brexit is now taking hold of the sector, making it a very difficult start to the year and leaving little hope for improvement next month.”

January’s PMI surveys suggest that the UK economy could be stalling, or even worse, says Chris Williamson, chief business economist at IHS Markit.

He blames Brexit uncertainty, and the wider slowdown in the global economy [as we’ve already seen in France, Italy, Ireland and Australia today]

Williamson fears the UK economy may not post any growth at all in the current quarter:

“Service sector growth ground almost to a halt in January, matching similar disappointing news in the manufacturing and construction sectors. The last three months have seen the economy slip into its weakest growth spell for six years, and indicate that GDP likely stagnated at the start of 2019 after eking out modest growth of just 0.1% in the fourth quarter.

“With the exception of July 2016, when demand contracted briefly following the surprise Brexit vote, service providers suffered the largest drop in new business since April 2009 as customers tightened their belts.

“Service sector employment fell for the first time in the past six years in a sign that the slowdown is feeding through to the labour market.

“The survey results indicate that companies are becoming increasingly risk averse and eager to reduce overheads in the face of weakened customer demand and rising political uncertainty. Such worries were in turn most commonly linked to heightened Brexit anxiety, though wider global political and economic factors were also seen to have been taking their toll on demand.”

NEWSFLASH: Britain’s dominant service sector has fallen to the brink of stagnation.

Data firm Markit has reported that growth fizzled out last month, with new orders decline for the first time in two-and-a-half years.

Companies reported that they were forced to cut staff numbers, for the first time in over six years.

This dragged Markit’s service sector PMI, which tracks activity across the sector, down to just 50.1 - the lowest reading in two and a half years.

It’s another clear sign that Brexit uncertainty is hurting the economy.

Markit says:

Survey respondents overwhelmingly linked the slowdown in business activity growth to heightened political uncertainty at the start of 2019.

A number of service providers reported that Brexit-related concerns had dampened client demand and resulted in delayed decision making on new projects

More to follow...

Back in the UK, car sales have suffered another decline.

Car registrations fell by 1.6% year-on-year in January, to 161,013 units. That’s a weak start to 2019, following two years of falling sales.

The Society of Motor Manufacturers and Traders, who compile the numbers, say private buyers bought more cars, while business and fleet registrations fell.

Demand for greener cars jumped too, with sales of electric, plug-in hybrid and hybrid cars up 26.3% year on year (but they’re still under 7% of the total market).

Seán Kemple, Director of Sales at Close Brothers Motor Finance, says Brexit uncertainty is hurting the auto sector.

“These figures, and recent news from Nissan in Sunderland, highlight the damaging effect of uncertainty on the industry. The entire sector is screaming out for a resolution, with all eyes on Parliament in the hope of some clarity on the way forward. Until we have this, the current scene is set to stay.

“However, once we have a new way forward on this issue, there remain other issues that will continue to exist from consumer confusion around fuel type to a global market slowdown. During this period, the opportunity is there for dealers to demonstrate their expertise and reassurance to customers. This will be key in bolstering bottom lines over the coming months. Having the right stock is vital, and the right after-sales support will support bottom lines as we begin a cold winter”

Newsflash: Eurozone private sector growth has hit its weakest level since mid-2013.

The monthly euro area PMI survey, which tracks activity across the economy, has come in at just 51.0 for January. That’s barely above stagnation.

Data firm Markit, which conducts the survey, reports that France and Italy were particularly weak, with growth contracting in both countries.

Output in France was down for a second successive month, and at the fastest rate in over four years. Meanwhile, Italian private sector output deteriorated for the third time in four months and to the greatest degree in over five years.

Manufacturing was the primary source of output weakness during January. Whilst service sector growth was unchanged since December at around a four-year low, production in manufacturing rose only slightly and at the weakest rate in over five- and-a-half years of growth.

The service sector PMI, just released, came in at 51.2 - matching December’s 49-month low. Any reading above 50 shows growth, while a figure below 50 means a contraction.

Chris Williamson, chief business economist at IHS Markit, says the eurozone economy may struggle to post any growth this quarter:

“The eurozone has started 2019 on flat note, with growth close to stagnation amid falling demand for goods and services. The PMI indicates that GDP is growing at a quarterly rate of just 0.1%, setting the scene for the region’s worst quarter since 2013. Such a weak start to the year would mean the current consensus forecast for 1.5% GDP growth in 2019 is likely to be revised lower, and hence lead to more dovish signals from the ECB.

“What started as a manufacturing and export-led slowdown has shown increasing signs of infecting the service sector. The manufacturing PMI numbers are indicative of the goods-producing sector slipping into recession, while growth in services is now running at its lowest for four years. Worst may be yet to come: new orders received by factories are declining at the steepest rate for nearly six years and new business inflows into the service sector have stalled. Demand is consequently falling to an extent not seen since mid-2013.

Despite all the gloom swirling this morning, European stock markets are rallying.

The FTSE 100 has jumped by 60 points, or 0.85%, to 07,095 points, extending its recent rally. That’s a two-month high, and on track for its highest close in three months.

BP is the top riser, after posting a surge in profits this morning. Mining companies such as Glencore and Antofagasta are also among the risers.

Oof! Italy’s services sector contracted last month, according to the latest survey of purchasing managers.

Data firm Markit reports that Italian services companies cut jobs, after suffering weaker new order growth and a drop in new business from abroad.

That’s bad news, with Italy already in recession.

In a rare piece of (mostly) good retail news, most of music chain HMV has been rescued from collapse.

Canadian firm Sunrise Records has swooped on HMV, which fell into administration a month ago. The deal saves around 1,500 jobs, and 100 stores.

Doug Putman, chief executive of Sunrise Records, believes HMV can have a bright future, despite the crisis on the high street and the rise of streaming music services.

He’s been on the Today Programme, raving about the attractions of vinyl (something you can’t get straight off Spotify).

However, not everyone can celebrate; 27 stores are shutting, with the loss of 455 jobs.

Ireland’s services sector has also entered a trough.

Growth has now weakened for four months running, hitting its lowest rate since May 2013 in January.

AIB, which conducts the survey, found that new orders weakened last month, while output growth also hit its lowest in over five years.

Having recovered strongly since the financial crisis, Ireland may now be feeling the impact of geopolitical problems, such as the US-China trade wars and Brexit worries.

Oliver Mangan, AIB Chief Economist, says:

The January AIB Services PMI signals a somewhat slower start to 2019 for the economy, after the robust rate of expansion recorded in the past number of years.

It suggests that growth in the Irish economy is likely to slow this year, which is hardly surprising given the loss of momentum in the global economy in recent times.

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

A splurge of data from services companies around the globe today are likely to confirm that the world economy stumbled into 2019.

Economists predict that Britain’s service sector only managed modest growth last month, while the eurozone is expected to have remained close to stagnation.

New data from Australia overnight shows that its service sector had a bad month:

Ireland also started 2019 badly, with service sector growth at its weakest since May 2013.

A poor set of data from Europe today would fuel concerns that its economy is faltering - just days after Italy fell into recession.

Michael Hewson of CMC Markets explains:

Last week’s manufacturing PMI’s showed little sign of a pickup in January, apart from a decent number from Spain, and today’s services numbers might well be similarly disappointing. We already had a sneak preview of the French and German numbers at the end of last month and the French numbers were particularly awful, disrupted to some extent by the “gilet jaunes” protests, coming in at 47.5, almost a 5-year low, and down from 49 in December, having cratered from 55.1 in November.

In Italy the services sector is expected to have stagnated in January, coming in at 50, and in the process inviting further scrutiny of the Italian governments growth expectations, which continue to look spectacularly heroic, as well as being even more unachievable as each day passes. It can only be a matter of time before the market refocuses its attention on the likelihood of the Italian government running back into conflict with the EU about its fiscal plans.

In the City, oil producer BP has posted a 65% surge in profits for the last quarter - thanks to the jump in crude prices of late. Online supermarket chain Ocado, though, has posted a 21% drop in earnings - as it keeps splashing cash on investment and partnership deals.

European markets are expected to maintain their recent rally, with the FTSE 100 heading for a new two-month high.

The agenda

• 9am GMT: UK car sales figures for January
  
• 9am GMT: Eurozone service sector PMI for January
  
• 9.30am GMT: UK service sector PMI for January