The services sector’s purchasing managers’ index, a survey conducted by HIS Markit, reached 55.6 in October – up from 53.6 in the previous month – significantly beating expectations of 53.3 (where a score in excess of 50 indicates growth). The sector therefore joins the manufacturing industry which is also growing unexpectedly strongly into the autumn, whilst the survey for all sectors also beat expectations. For the fuller picture please read the article below which appeared today in The Daily Telegraph.
Roger Mundy, Managing Director, Beardsley Theobalds, 4th November 2017
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 manager’s index, an influential survey from IHS Markit, climbed to 55.6, up from 53.6 in September and beating expectations of 53.3. Any score above 50 indicates growth.
The surveys for all sectors beat expectations to create a combined score of 55.3, the strongest number since April. Chris Williamson, IHS Markit’s chief business economist, believes this puts the UK economy 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 to growth over time, with Capital Economics predicting a steady expansion into 2018. “Overall, the survey is consistent with our view that the economy has held onto its recent momentum in the fourth quarter and 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 of the PMI survey fell to 61.7 last month, indicating that prices are still rising but at the slowest pace since September last year.