UK private sector growth beats expectations in October - survey

The UK private sector grew at a faster pace than expected in October, a preliminary survey reading showed Friday.

Supported by the fastest rise in new work in over two years, the S&P Global flash composite purchasing managers' index rose to 53.1 points in October, from the previous month's 52.0 in September. It was the best composite PMI reading in eight months.

Now above the 50-point neutral mark, the reading suggests UK private sector growth has picked up. The flash composite PMI topped the FXStreet-cited forecast of 51.8.

"UK private sector firms recorded a sustained upturn in business activity during October, supported by the sharpest rise in new work since September 2024. Greater demand meant that employment numbers returned to growth, albeit only marginally, which ended a two-year period of job cuts," S&P Global said.

"October data indicated another steep increase in input prices across the private sector economy. The overall rate of cost inflation was the strongest since June, led by a marked acceleration in inflationary pressures across the manufacturing sector."

The composite PMI is calculated using the service and manufacturing sector readings. The flash services PMI rose to 53.1 in October from 52.1 in September, beating the FXStreet-cited forecast of 51.8.

The manufacturing PMI climbed to 52.8 in October from 51.9 in September. It had been expected to edge down to 51.8.

The services PMI hit an eight-month high, while the manufacturing PMI rose to its best level in five months.

S&P Global said: "Total new work across the private sector economy expanded at the sharpest pace for 25 months in October, led by a marked improvement in new orders received by service providers. Survey respondents commented on a general recovery in customer demand, with increased volumes of new work seen in both domestic and export markets. A number of firms cited a boost to sales from AI investment spending and rising demand for technology services, while others noted receding risk aversion and resilient global economic conditions.

"However, there were still many reports of sales headwinds linked to elevated geopolitical uncertainties and weak consumer confidence. Subdued demand from clients in the construction and real estate sectors was also commonly reported."

S&P Global said input cost inflation accelerated at the sharpest pace since June, largely down to the manufacturing sector.

"Stronger inflationary pressures were mostly driven by a rapid rise in input prices across the manufacturing sector, which survey respondents attributed to higher energy, raw material and transportation costs. However, latest data indicated that prices charged by private sector firms increased at a slightly slower pace than in September," S&P Global explained.

Business expectations picked up, but optimism is still below a long run average.

The survey features a panel of around 650 manufacturers and 650 service providers. The flash data encompasses the responses of between 80% and 90% of the firms.

Final October manufacturing data is out on November 2, with the service sector and composite readings two days later.

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