UK service-sector growth slows to 11-month low
By Benjamin Chiou
Date: Tuesday 05 Nov 2024
(Sharecast News) - Service-sector growth in the UK eased to its lowest level in nearly a year in October as heightened uncertainty ahead of the Autumn Budget delayed spending decisions, according to S&P Global.
The S&P Global purchasing managers' index for the UK services sector fell to 52.0 last month, according to data released on Tuesday.
While this was slightly ahead of the 51.7 level expected by economists, it was down from 52.4 in September and the lowest level since November 2023.
Respondents to the survey suggested that improving economic conditions had helped lift overall business activity in October - indicated by any figure over the neutral 50-point level - though geopolitical tensions and caution ahead of the budget weighed on clients' willingness to spend.
Longer sales conversion cycles also contributed to a softer rate of new business growth, with the increase in new work slowing to its lowest rate since June. As a result, staffing numbers fell for the first time since December, with firms citing budget constraints due to higher wages.
Nevertheless, export sales grew at their fastest clip since March 2023, with stronger demand from EU clients despite ongoing trade frictions due to Brexit, S&P Global said.
"The wait for clarity on government policy ahead of the Autumn Budget was widely reported to have weighed on business confidence and spending," said Tim Moore, the economics director at S&P Global Market Intelligence.
"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."
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