Services growth lifts hopes of recovery

BRITAIN’S powerful services sector accelerated in October as demand picked up and confidence ballooned.

It joins the manufacturing industry in growing unexpectedly strongly into the autumn, raising hopes that this year’s slowdown in economic growth could be past the worst.

The services sector’s purchasing managers’ index, a survey from IHS Markit, climbed to 55.6, up from 53.6 in September and beating expectations of 53.3. A score above 50 indicates growth.

The surveys for all sectors beat expectations to create a combined score of 55.3, the strongest since April. Chris Williamson, IHS Markit’s chief business economist, believes this puts the UK on track to grow by 0.5pc in the final quarter of the year, accelerating from 0.3pc in the second quarter and 0.4pc in the third.

Analysts expect this to result in a modest improvement in growth over time. “Overall, the survey is consistent with our view that the economy should post reasonable growth of 2pc or so next year,” said UK economist Ruth Gregory.

The survey also contained hints that inflation could start to fade. The input prices component fell to 61.7 last month, indicating that prices are rising at the slowest pace since September last year.