Big gain for UK’s services sector in October driven by weaker pound

The latest PMI survey data from IHS Markit and CIPS signalled that the dominant UK service sector moved up a gear at the start of the final quarter of 2016. The rate of growth of total business activity accelerated to the fastest since January, as did new business expansion. The sector continued to generate more jobs, albeit at a weaker rate than the average seen over the past three years. Latest data also revealed a marked build up of inflationary pressures in the sector, linked to the weak pound.

David Noble, Group Chief Executive Officer at the Chartered Institute of Procurement & Supply: "Though weaker than the 20-year survey average, growth of overall activity sped up to its highest since January this year. Concerns over the EU referendum result showed some signs of dissipating as respondents commented on a refocus on opportunities and ramped up marketing and sales promotions. "However, business optimism remained lukewarm in spite of the spike in new orders and was below the long-term average of the survey's history. Staffing levels showed a moderate improvement but at weaker levels than seen over the past three years".