UK service sector registers growth in October

Last month saw a rise in activity for the UK's service sector for the first time in four months.

According to the latest Markit/CIPS service sector purchasing managers' index (PMI), there was an increase from 53.3 to 54.9 from the previous month. A result above 50 indicates growth.

Relatively subdued

Markit said the pace of the increase was "relatively subdued", although their survey found that job growth was at a five month high for companies in the services sector, which currently makes up around 75% of activity in the private sector in the UK.

After the latest figures were released, sterling rose to its highest against the euro since mid-August.

Improvement

Recent comparable surveys of the construction and manufacturing sectors have also shown strong results, leading many observers to wonder if the Bank of England may use the data to support a rise in interest rates soon.

Chief economist at Markit, Chris Williamson, said: "Such an improvement, together with the revival in hiring signalled by the three surveys…may coax more policymakers into [voting to raise] interest rates before the end of the year."

Williamson added a note of caution when he also said: "Dovish policymakers will note the ongoing lack of inflationary pressures in October, suggesting that there is no need to rush into raising rates."

However, most economists still predict that the Bank of England will hold back on a rate rise until the second quarter of next year.