Macro
UK business activity hits an eight-month high in October as firms add staff for the first time since 2024
S&P Global's flash composite PMI rose to 53.1, beating every forecast in a Reuters poll, while rising input costs strengthen the case for a Bank of England hike on November 5.
HedgeWeekly News Desk ·
Britain's private sector grew at its fastest pace since February this month. S&P Global's flash UK composite output index rose to 53.1 in October from 52.0 in September, above every forecast in a Reuters poll of economists. The services activity index climbed to 53.1 from 52.1, the manufacturing output index reached a 25-month high of 53.1, and the manufacturing PMI rose to 52.8 from 51.9.
New business grew at the sharpest rate since September 2024, led by services, as firms reported a broader recovery in demand at home and abroad. Companies credited AI investment and defence projects for part of the lift. Staffing rose marginally for the first time since September 2024, ending two years of job cuts; service providers hired while manufacturers trimmed headcount.
Cost pressure picked up. Input price inflation was the strongest since June, driven by manufacturers facing higher energy, raw material and transport bills, and firms said the Middle East conflict had lengthened shipping times. Selling prices rose slightly more slowly than in September. Some companies held back spending ahead of next week's Budget. The UK reading outpaced the euro zone, where the flash composite slipped to 51.9 and France's fell into contraction at 48.4.
The survey matters most for rates. S&P Global chief business economist Chris Williamson said persistent price pressures make a Bank of England rate rise at its coming meeting almost certain and further increases into 2027 more likely, according to Reuters. The BoE is expected to raise rates on November 5 for the first time in more than three years. Gilt and sterling investors will next weigh the Budget, which Williamson said could unlock growth if it avoids measures that hurt business, against Friday's softer September retail sales figures.