(SHARECAST) – Expansion in the services sector picked up in October, new data shows.
The Markit/CIPS services Purchasing Managers’ Index (PMI), which covers a diverse array of activities from banking to restaurants, climbed to 53.2 in September from 52.8 the previous month, against expectations of a fall.
However, CIPS chief executive David Noble counselled caution on the figures.
“On the face of it, with a four-month high, October’s services PMI figure looks positive, but real and sustained growth remains subdued,” he said.
“The consequences of government spending cuts are not yet fully realised and business expectations remain historically low.”
Howard Archer, chief European and UK economist at the forecasting group IHS Global Insight, was also cautious.
“Employment in the services sector edged down in October for the third time in four months,” he said.
“This fuels concern that the private sector will not be able to compensate for the public sector job losses that are increasingly on the way.”
Concerns over the ability of the private sector to continue driving the economy as the public sector is scaled back were also expressed yesterday by the Chartered Institute of Personnel and Development.
It said that the economy would need to grow by 2.5 percent a year to prevent rising unemployment.
Figures from Markit/CIPS yesterday showed a contraction in the construction sector in October, with the PMI down to 51.6 from 53.8 in September. However, manufacturing activity grew more than expected, fuelled by exports. The PMI rose to 54.9 from 53.5 in September.
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