GETTYThe index from IHS Markit was expected to inch higher from 54.2 to 54.3, but instead dropped to 53. Any reading above 50 indicates growth, but this was the slowest upturn in services output in almost a year and a half.
The poor reading from the service sector follows equally disappointing results at the end of last week from the manufacturing and construction indices and suggests overall that the United Kingdom economy entered 2018 on a weak footing.
"The composite PMI continues to signal a bullish outlook for GDP growth in the Eurozone", Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics said in an email.
"The recovery across India's services sector continued during January, with growth in output picking up to the joint-strongest since June 2017 as underlying demand conditions improved", said Aashna Dodhia, economist at IHS Markit, and author of the report.
Having been unchanged in December, the volume of new business received by Indian service sector companies rose in January.
A reading above 50 indicates the sector is still growing, albeit at a slower rate.More news: Fallen Kingdom Extended Trailer Released
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Cost burdens from higher prices for fuel, insurance, transport and food, lifted input costs, but at their slowest pace since September 2016, suggesting inflationary pressures were beginning to ease. "Overall, if I look at the whole thing, I don't see any spurt in noticeable manner in any particular sector in the service area", she said.
That, coupled with the government's plan to increase spending for rural areas and support farmers in its federal budget, could push up inflation and prompt the central bank to raise interest rates sooner-than-expected.
'We expect the Bank to keep its cards fairly close to its chest on Thursday, and we think at this stage, the odds of a May rate hike are roughly 50:50'.
"The latest PMIs strengthen the case for the MPC to take a lengthy pause before raising interest rates again".
'As the economic data is stronger at the start of 2018 than in mid-2017 when the BoE last prepared markets for a hike, it seems likely that the BoE will continue with its policy tightening this year'.