Growth in the UK services sector grew in October, but the pace has slowed to an almost two-year low, according to "disappointing" official data.
The headline seasonally adjusted Business Activity Index – which is based on a single question asking respondents to report on the actual change in business activity at their companies compared to one month ago – posted 50.6 in October, falling from 52.2 in September.
Although this still indicates an expansion in the services industry, the rate of growth was the slowest in the current 22-month period of rising activity.
The Markit/Cips UK Services PMI report said weaker growth of new business in October led companies to deplete backlogs of work, while staffing levels were reduced for the second month running.
Andrew Harker, economist at survey compilers Markit, said the latest report was a “warning” to those who saw the strong, 1pc growth in GDP during the third quarter as symbolising the start of a strong and speedy economic recovery.
“With activity rising at the weakest pace in close to two years, the broadly stagnant trend seen in official data over the year to date looks to have continued at the start of the fourth quarter,” he said.
“Although there are signs of improvements, panellists still referred to the fragility of both demand and confidence among clients.
Competitive pressures were also highlighted, both by respondents and by the slight nature of output price inflation.
“The expectation among firms is for activity to improve over the coming year, but the road to full economic recovery still looks to be a long one.
Ross Walker at RB said the figures were "disappointing", and while a "great deal" hadn't been expected in October, the numbers had come in weaker than expected.
"It's a little bit concerning," he said. "It looks like the fourth quarter is going to be pretty anaemic."
Meanwhile in Ireland, the country's services sector has been much stronger and has seen the largest rise in activity in five years (since October 2007), as new business increases sharply.
The seasonally adjusted Business Activity Index increased to 56.1 in October, from 53.9 in September. It signalled the sharpest monthly increase in activity in five years during October.
Activity has now risen in three successive months, with the latest expansion mainly linked to higher new business, according to the survey.
Markit reported that companies remained optimistic that activity will increase over the coming 12 months, and the level of positive sentiment was broadly in line with that seen in September.
Predictions of higher export demand were reported, while there were also indications that signs of improvements in domestic markets could support growth over the coming year.
Meanwhile, the rate of growth in new business accelerated for the second consecutive month in October, and was the strongest since August 2007.
The reason for the strong growth was attributed to companies securing new clients and the finalising of deals, respondents stated.
A sharp rise in new export orders was also recorded, extending the current period of expansion to 15 months.
Moreover, the latest increase was the fastest since June 2010. As a result of higher workloads, employment in the services sector in Ireland increased for the second month running.”
telegraph.co.uk
The headline seasonally adjusted Business Activity Index – which is based on a single question asking respondents to report on the actual change in business activity at their companies compared to one month ago – posted 50.6 in October, falling from 52.2 in September.
Although this still indicates an expansion in the services industry, the rate of growth was the slowest in the current 22-month period of rising activity.
The Markit/Cips UK Services PMI report said weaker growth of new business in October led companies to deplete backlogs of work, while staffing levels were reduced for the second month running.
Andrew Harker, economist at survey compilers Markit, said the latest report was a “warning” to those who saw the strong, 1pc growth in GDP during the third quarter as symbolising the start of a strong and speedy economic recovery.
“With activity rising at the weakest pace in close to two years, the broadly stagnant trend seen in official data over the year to date looks to have continued at the start of the fourth quarter,” he said.
“Although there are signs of improvements, panellists still referred to the fragility of both demand and confidence among clients.
Competitive pressures were also highlighted, both by respondents and by the slight nature of output price inflation.
“The expectation among firms is for activity to improve over the coming year, but the road to full economic recovery still looks to be a long one.
Ross Walker at RB said the figures were "disappointing", and while a "great deal" hadn't been expected in October, the numbers had come in weaker than expected.
"It's a little bit concerning," he said. "It looks like the fourth quarter is going to be pretty anaemic."
Meanwhile in Ireland, the country's services sector has been much stronger and has seen the largest rise in activity in five years (since October 2007), as new business increases sharply.
The seasonally adjusted Business Activity Index increased to 56.1 in October, from 53.9 in September. It signalled the sharpest monthly increase in activity in five years during October.
Activity has now risen in three successive months, with the latest expansion mainly linked to higher new business, according to the survey.
Markit reported that companies remained optimistic that activity will increase over the coming 12 months, and the level of positive sentiment was broadly in line with that seen in September.
Predictions of higher export demand were reported, while there were also indications that signs of improvements in domestic markets could support growth over the coming year.
Meanwhile, the rate of growth in new business accelerated for the second consecutive month in October, and was the strongest since August 2007.
The reason for the strong growth was attributed to companies securing new clients and the finalising of deals, respondents stated.
A sharp rise in new export orders was also recorded, extending the current period of expansion to 15 months.
Moreover, the latest increase was the fastest since June 2010. As a result of higher workloads, employment in the services sector in Ireland increased for the second month running.”
telegraph.co.uk
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