UK services growth strengthens expectations of a Bank of England rate rise

The UK services sector grew at its fastest pace in eight months in October, strengthening expectations that the Bank of England will raise interest rates on Thursday. The survey points to renewed business momentum, supported partly by artificial intelligence spending, but rising costs are adding to concerns about inflation.

S&P Global’s services purchasing managers’ index rose from 52.1 to 52.8, above the 50 mark that indicates expansion. Firms reported a rebound in new orders and increased hiring, ending two years of continuous job cuts in the sector; about four in 10 survey respondents said their input prices had risen. Most economists expect a quarter-point rate rise to 4%, though financial markets anticipate further increases and consumer-facing services remain under pressure from weak confidence and squeezed household spending power.