UK services sector growth eased in run-up to Budget
‘Heightened’ policy uncertainty led to growth slowing again in October, according to a closely watched business survey.
Growth in the UK’s services sector slowed to its lowest rate in nearly a year last month as some firms reported policy uncertainty ahead of the Budget, according to new figures.
The closely-watched S&P Global UK services PMI survey scored 52.0 in October, slowing from 52.4 in September.
It was slightly below the 51.8 reading forecast by a consensus of economists.
Any reading above 50 means a sector is in growth, while a score below this means it is shrinking.
Tim Moore, economics director at S&P Global Market Intelligence, said: “October data signalled another slowdown in output growth across the service sector as heightened business uncertainty and concerns about the general UK economic outlook had an adverse impact on demand conditions.
“The latest expansion of service sector activity was the weakest since November 2023, while new business growth slipped to a four-month low.
“The wait for clarity on Government policy ahead of the autumn Budget was widely reported to have weighed on business confidence and spending.”
Input cost inflation, mainly driven by higher wages, rose to a three-month high, businesses reported, but remained softer than in the first half of the year.
Price inflation edged up, but stayed close to its 43-month low recorded in September.
Services sector inflation has been a closely watched metric for policymakers at the Bank of England, who meet this week.
Policymakers are expected to cut the base interest rate by a quarter point, following a dip in the headline rate of inflation.
Mr Moore continued: “Broader geopolitical concerns and forthcoming US elections also added to a sense of wait-and-see on business investment decisions in October.
“At the same time, cost-of-living pressures remained a constraint on household spending.
“With service providers grappling with softer new order growth and less upbeat business activity expectations for the year ahead, the latest survey pointed to a decline in staffing numbers for the first time since December 2023.
“A number of firms also noted budget constraints due to elevated salary pressures.
“Higher wages resulted in another month of strong input cost inflation across the service economy.”
