The UK services sector grew at its fastest pace in seven months in October, with firms returning to hiring after a two-year period of job cutting, according to a new survey.
The S&P Global UK services PMI index, which is closely watched by economists, showed a reading of 52.8 in October, up from 52.1 in September. Any reading above 50.0 indicates growth, while a reading below that level signals contraction.
Stronger demand drives activity
October's score was the highest since February, before the escalation of the US-Israel's war with Iran. Business activity accelerated partly because of stronger customer demand, which led to an increase in the level of orders firms received during the month.
Some firms said they had more sales because customers were spending more on artificial intelligence (AI) investment, a trend that has recently helped drive growth in the economy.
Hiring returns after two years
Bigger workloads prompted firms in the services industry to take on additional staff in October, the survey found. This ends two years of continuous job cutting across the sector, with many firms during that period saying they were responding to higher labour and business costs, or not replacing employees who leave.
The services sector includes businesses like pubs, restaurants, theatres and salons, through to property and financial services firms, and is the dominant industry in the UK.
Outlook and cost pressures
Tim Moore, economics director at S&P Global Market Intelligence, said October's survey signals "increasing economic resilience despite challenges from geopolitical tensions, elevated cost pressures and subdued consumer confidence".
He added that while there was a renewal in hiring, "the pace of job creation was only marginal as firms noted efforts to control costs and prioritise efficiency gains where possible".
