The week ahead 26 January 2026 - UK economy enjoys a strong start of 2026
What to watch out for in the UK economy and property market this week.
The provisional UK PMI data for January 2026 was stronger-than-expected, suggesting businesses have moved into the new year with growing momentum.
The PMI is an index of business activity, based on a survey of firms, whose convention is that a reading above 50 points to growth in the commercial side of the economy. The first draft figure for January 2026 was an impressive 53.9, up from 51.4 in December 2025. The sub-index for services industries stood at 54.3 in January, up from 51.4 the previous month. Manufacturing saw a more subdued increase, rising from 50.6 in December to 51.6 in January. Some of the firms who participated in the survey said they were experiencing a post-Budget surge in investment spending by clients.
Statistics from ONS showed UK retail sales increased by 0.4% month-on-month in December 2025, marking a rebound after sales contracted in October and November, and exceeding the consensus forecast of -0.1%. This owed much to robust sales of precious metals over the internet, so effectively a niche area of retail seeing a spike in activity. Also, supermarket and automotive fuel sales increased, which was probably related to Christmas. This took full year retail sales growth for 2025 to 1.3%, up from 0.2% in 2024. However, it should be noted that over the course of 2025 sales growth was volatile.
Continuing the run of encouraging data for the UK, the GfK Consumer Confidence index rose from -17 in December 2025 to -16 in January 2026.
Financial markets rallied on Thursday and Friday as tensions over Greenland eased. The FTSE 100 blue chip shares index at lunchtime on Friday was trading at around the 10,150 mark, up 2.6% on a month earlier.
This week sees data released on UK car production and Eurozone GDP growth, plus the US Federal Reserve will make its interest rate decision on Wednesday.
The Fed is not expected to cut interest rates at this meeting. So, the attention of Wall Street will be focussed on the press conference for clues on when the next cut may occur. Investors will also be looking for any reaction from the White House, given growing concerns over political interference.
This week's figures
Wednesday 28 January
US Federal Reserve Interest Rate Decision, January 2026
3.50%-3.75% previous
3.50%-3.75% forecast
No change is expected at this meeting, as the Fed cut its policy rate by 25 bps in December 2025, so we believe they will now be monitoring the effects of that reduction.
Thursday 29 January
UK Car Production, December 2025
65.9k previous
60.1k forecast
Car production rebounded in October and November as a result of the re-opening of JLR plants, following a cyber attack. We believe by December the numbers will be starting to normalise again and are forecasting a month-on-month decline.
Friday 30 January
Euro Area GDP Growth, q-on-q, Q4 2025
0.3% previous
0.3% forecast
We believe that growth in the final quarter of 2025 will be in line with that of Q3, thanks to low inflation and higher production for defence-related industries.
