UK services sector growth rose to an eight-month high in October, according to S&P Global’s survey, with the services PMI climbing from 52.1 to 52.8. The reading lands days before the Bank of England’s Monetary Policy Committee meets on Thursday, when a quarter-point increase to 4 percent is widely expected.
Hiring returns and prices climb
Services firms took on additional staff in October, ending two years of continuous job cutting in the sector. Growth was bolstered by spending on AI, linked to datacentre construction.
Input price inflation in services accelerated to a five-month high. Around four in 10 firms in the survey panel reported higher input costs, while just 1 percent reported a decline.
Economists see a hike as nearly certain
Tim Moore, economics director at S&P Global Market Intelligence, said the signals underscored the near-certainty of a rate rise in November and raised the likelihood of further tightening into 2027. Matt Swannell, chief economic adviser to the Item Club, said an increase looked nailed on at the meeting.
Rob Wood, chief UK economist at Pantheon Macroeconomics, estimated underlying services inflation at about 4.1 percent, down from the latest official reading of 4.4 percent but still too high for the committee to stand pat. Services output price balance eased to 56.9 in October from 57.8 in September.
Inflation pressures across the euro area
Eurozone inflation reached 4 percent in October, a three-year high, up from 3.8 percent in September. The European Central Bank left borrowing costs unchanged the week before, making a December rise more likely.
Financial markets expect three further rate increases in the UK, while most City economists expect inflation to peak in spring next year.
Source: European Central Bank · S&P Global
