UK service sector growth picks up

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Growth in the UK service sector accelerated last month, according to a closely watched survey.

The latest Markit/CIPS service sector purchasing managers’ index (PMI) rose to 54.9 from the previous month’s figure of 53.3.

A figure above 50 indicates growth in the sector.

It was first time for four months that the growth rate has improved, although Markit said the pace remained “relatively subdued”.

Sterling rose to its highest point against the euro since mid-August at 70.78 pence after the numbers were released, and against the dollar it rose to $1.5446.

The survey found that jobs growth hit a five-month high among services companies, which account for about three-quarters of activity in the UK’s private sector.

The services figure followed strong readings from comparable surveys of the manufacturing and construction sectors.

Markit chief economist 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.”

However, he added: “Dovish policymakers will note the ongoing lack of inflationary pressures in October, suggesting that there is no need to rush into raising rates.”

Most economists do not expect the Bank of England to raise rates until the second quarter of next year.