UK private sector growth accelerates in October as cost inflation eases

Investing.com -- The UK private sector economy gained momentum in October, with the S&P Global Flash UK PMI Composite Output Index rising to 51.1 from 50.1 in September, marking a two-month high.

Manufacturing production expanded for the first time in 12 months, while the service sector continued its modest growth trend. The manufacturing output index jumped to 51.2 from 45.7 in September, reaching a 13-month high, while the manufacturing PMI rose to 49.6 from 46.2.

New business volumes increased in October, contributing to the slowest rate of private sector job cuts since May. Input price inflation moderated to its lowest level since November 2024, leading to a slower rise in output charges.

The service economy showed sluggish growth, with many firms citing subdued consumer sentiment and deferred corporate decision-making ahead of the November Budget. Manufacturers linked higher output to restocking efforts and a tentative improvement in domestic demand, though the JLR cyberattack continued to impact the automotive supply chain despite a phased restart of operations.

Export sales continued to decline, particularly in manufacturing, with companies noting weak global demand and the impact of US tariffs. Job losses moderated but persisted as businesses dealt with high salary pressures and excess capacity.

Business confidence improved slightly, reaching the second-highest level since October 2024. Service providers attributed this to early signs of market improvement and planned product launches, while manufacturers cited long-term investment strategies and plans to enter new export markets.

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, noted that while October’s data brings hope of improvement, the pace of growth remains consistent with only sluggish GDP expansion of around 0.1%.

He added that businesses are "treading cautiously" ahead of the upcoming Budget, which could significantly influence business sentiment in the coming months.