New orders boost growth in the UK services sector
Activity in the UK’s dominant services sector grew at the fastest rate for six months in October, helped by stronger order books and “resilient” demand.
The Markit/CIPS purchasing managers’ index (PMI) for services rose to 55.6, up from 53.6 in September, well above the 50 threshold that indicates growth.
The services sector, which accounts for most of the UK economy, saw new orders rise at the fastest pace since May.
However, new employment was muted due to uncertainty over longer-term demand.
The better than expected reading for services follows a strong October for manufacturing as well as a return to growth for the construction industry last month.
Ruth Gregory, UK economist at Capital Economics, said the data suggests that quarterly GDP growth is running at about 0.5%, above the 0.4% recorded in the third quarter.
The pound edged up on the dollar and euro to $1.30620 and €1.12140 respectively.
Chris Williamson, chief business economist at IHS Markit, which compiles the survey, said: “The latest PMI surveys bring mixed news on the economy.”
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.”