Services sector steps up the pace

BRITAIN'S dominant service sector stepped up a gear last month, easing worries the economy is slowing sharply. The CIPS/Reuters purchasing managers' report showed client confidence, product improvement and increased marketing drove an upturn in new business.

The headline business activity index registered 56.3 against 54.7 in September, where a reading above 50 indicates expansion the 19th successive month-on-month expansion in the sector.

However, it was not all plain sailing as rising staff levels, combined with higher prices for fuel, energy and raw materials, saw firms' input prices rising at the fastest pace for four years.

Although still down on readings recorded earlier in the year, October's Index was marginally above the long-term series average and representative of strong sector growth at the start of the final quarter of 2004.

The majority of companies said that improved activity growth was in line with a concurrent rise in new business expansion.

Service providers linked confidence to hopes of sustained strength of demand and plans to raise marketing and investment activity over the coming months.

However, there was some concern that economic growth may slow, with the net result a slight fall in the overall degree of positive sentiment to its lowest since June 2003.