UK’s powerhouse services sector records fastest rise for six months
The Markit/CIPS services purchasing managers’ index (PMI) hit 55.6 last month, up from 53.6 in September.
Activity in Britain’s services sector has accelerated to a six-month high in October, shrugging off a spate of sluggish performances thanks to a rebound in new work.
The Markit/CIPS services purchasing managers’ index (PMI) hit 55.6 last month, up from 53.6 in September and above economists’ expectations of 53.2.
A reading above 50 indicates growth.
Output growth across the industry, which accounts for around 80% of the UK economy, was boosted by brighter order books and robust demand from clients.
Sterling rose 0.1% versus the US dollar to 1.306 following the update, while the pound was 0.2% higher against the euro at 1.121.
It comes as solid UK demand pushed the manufacturing industry higher in October, while the construction sector edged into growth territory after contracting in September.
Chris Williamson, chief business economist at IHS Markit, said the survey brought “mixed news” despite output recording its fastest rise since April.
He said: “While an upturn in business activity growth adds some justification to the Bank of England’s decision to hike interest rates for the first time in a decade, a deeper dive into the numbers highlights the fragility of the economy and points to downside risks for the outlook.
“The good news was that October saw business activity across services, manufacturing and construction grow at its fastest rate for six months.
“The data point to the economy growing at a quarterly rate of 0.5%, representing an encouragingly solid start to the fourth quarter.
“However, a downturn in business optimism about the year ahead, fueled mainly by Brexit-related uncertainty, suggests that risks are tilted to the downside as far as future growth is concerned.”