- Prior 50.0
- Composite PMI 48.2 vs 47.2 prelim
- Prior 49.1
Despite the revision higher, UK services activity is seen slumping at its fastest pace since January last year. Business optimism also fell sharply to its weakest since April 2020 as overall conditions were impacted by shrinking demand and greater risk aversion among clients, largely due to heightened political and economic uncertainty. S&P Global notes that:
"UK service providers reported the steepest drop in business activity for 21 months in October as household spending cutbacks and shrinking business investment combined to dent new order volumes. A number of firms noted that political uncertainty and rising borrowing costs since the mini-Budget had led to greater risk aversion among clients and a wait-and-see approach to new projects. There were also many reports that higher energy bills had led to reduced spending on non-essential services.
"Overall input price inflation slowed for the fifth month running during October, which signalled a gradual easing of cost pressures from the record highs seen this spring. However, the latest rise in business expenses was still faster than at any time in the survey history prior to the pandemic, driven by further steep increases in energy costs and staff wages.
"Stubbornly high inflation , increased borrowing costs and worries about the UK economic outlook all contributed to weaker business optimism in October. Aside from the slump at the start of the pandemic, the degree of confidence across the service economy is now the lowest since December 2008."