UK private sector production growth slows sharply in October

According to the report from IHS Markit/CIPS, UK private sector companies indicated another overall increase in business activity during October, but the rate of expansion slowed considerably since the previous month. This reflected a much weaker contribution from the service economy, with survey respondents often commenting on tighter restrictions across the hospitality sector and the impact of local lockdowns on general consumer spending. As a result, service providers reported a decline in new business for the first time since June, which contrasted with another solid expansion in new orders received by manufacturing companies in October.

The headline seasonally adjusted UK Composite Output Index – which is based on approximately 85% of usual monthly replies - registered 52.9 in October, down from 56.5 in September and further below August's recent peak of 59.1. Although still above the 50.0 no change value, the latest reading pointed to the weakest rise in UK private sector output since a return to growth was first signalled in July.

Manufacturing production (index at 56.4) increased at a much faster pace than service sector activity (index at 52.3). In both sectors, the speed of recovery was the slowest for four months during October.