UK Service Sector Growth Gains Momentum In October

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The UK service sector registered a sharp growth momentum in October driven by robust new work amid the reopening of the economy and looser international travel restrictions, final survey results from IHS Markit showed on Wednesday.

The headline Chartered Institute of Procurement & Supply services Purchasing Managers' Index rose to 59.1 in October from 55.4 in September. The flash reading was 58.0.

New orders increased at the steepest rate in four months in October and new work from abroad increased at the fastest pace since June 2018.

Employment increased at the second-fastest pace since June 2014. Service providers commented on exceptionally strong demand in the hospitality, leisure and transportation sectors.

Cost inflation accelerated at the strongest pace in over 25 years. The rate of output charge inflation reached a fresh survey-record high in October.

The degree of positive sentiment about the year ahead growth outlook eased for the second month running to its lowest since January.

"The seemingly likely rise in interest rates this week may take some of the heat out of the overinflating UK economy but will also result in additional pressure on some household budgets, threatening to cut off this stream of good fortune early next year," Duncan Brock, group director at the CIPS, said.

The composite output index came in at 57.8 in October, up from 54.9 in the previous month. The reading was also above the flash estimate of 56.8. Nonetheless, the index remained much weaker than the peak seen in May.

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