UK Oct services PMI strongest since Jan 2016

The services sector activity in the UK economy improved much better-than markets’ expectations last month, hitting the highest levels since March 2011, a fresh report from Markit Economics showed on Thursday.

The services PMI quickened its pace of expansion to 54.5 in Oct versus a 52.6 reading booked in Sept. Markets predicted a slightly weaker print of 52.4 last month.

Key findings from Markit:

Activity and new business both rise at strongest rates since January

Strongest input price inflation since March 2011

Charge inflation at five-and-a-half year record

Chris Williamson, Chief Economist at Markit, noted: ““An encouraging picture of the economy gaining further growth momentum in October is marred by news that inflationary pressures are rising rapidly.”

“Business activity is growing at a rate consistent with solid economic growth of 0.4-0.5% in the fourth quarter (the surveys suggest the initial 0.5% GDP growth estimate for the third quarter could be revised slightly lower). What’s especially reassuring is that growth is also becoming more balanced.”