The UK service industry experienced swifter trade last month, boosted in part by a better-than expected performance by high street stores, a closely watched report has revealed.
An index published by the Chartered Institute of Purchasing and Supply (CIPS) climbed to 56.1 in October, a strong gain on September's reading of 55 - a nine-month low. October's score was the highest since July.
CIPS said the improvement was driven by 'new business' - meaning contracts and new businesses starting up - a reassuring sign for the economy at large. It led to a small increase in employment in the sector, the group added.
A Confederation of British Industry survey published yesterday revealed that high street sales - a significant part of the service sector - were better than expected last month, though many more retailers said sales slowed than said they’d improved.
But analysts said the latest report was far from good news. George Buckley, UK economist at Deutsche Bank, said that while the headline figure was robust, the detail revealed a different story.
"Outstanding business edged modestly lower, employment and output prices were broadly unchanged, input price growth fell and there was a near three-point decline in expectations. This is not, therefore, as strong a report," he said.
However, Buckley added that conditions were not sufficiently worrying to force an interest rate cut when the Bank of England's Monetary Policy Committee meets next week.
He said: "As such, the latest CIPS surveys [including manufacturing and construction published this week] add to the evidence to suggest that the Bank will, for a third month, keep interest rates unchanged in November."
The UK cost of borrowing currently sits at 4.5%.
