By Sohaib Shams
The UK’s dominant services sector expanded at its fastest pace in eight months during October, with businesses returning to hiring after a two-year period of continuous job cuts, according to the closely watched S&P Global UK Services PMI survey.
PMI Reading Signals Growth
The index rose to 52.8 in October from 52.1 in September, marking the highest reading since February. Any figure above 50.0 indicates expansion, while below signals contraction.
AI Investment Drives Demand
Stronger customer demand boosted order volumes, with some firms attributing increased sales to clients spending more on artificial intelligence investments – a trend that has recently supported broader economic growth.
Hiring Returns After Two-Year Cutback
Heavier workloads prompted services firms to take on additional staff in October, ending two years of job reductions. During that period, many companies cited higher labour and business costs or chose not to replace departing employees.
Cost Pressures Persist
Input cost inflation accelerated to a five-month high, driven by higher energy, fuel, transport, wage and raw material expenses. Businesses passed these costs on through another sharp rise in prices charged.
Two-Speed Economy Outlook
Tim Moore, economics director at S&P Global Market Intelligence, said the survey signals “increasing economic resilience despite challenges from geopolitical tensions, elevated cost pressures and subdued consumer confidence.” He noted hiring pace remained marginal as firms prioritised cost control and efficiency. Matt Swannell, chief economic adviser to the Item Club, added that recent strength has been concentrated in IT and professional services, partly reflecting rapid AI adoption, while consumer-facing services face pressure from squeezed household spending power.
