Britain’s services sector, which accounts for more than 75% of the country’s GDP, accelerated in October and has “moved up a gear,” according to the latest PMI data from IHS Markit, released on Thursday morning.
The services sector — which includes everything from banking to waitressing — drew a reading of 54.5 in the month, almost two full points ahead of September’s 52.6 reading, and even further above the expected 52.4 forecast by economists.
IHS Markit’s numbers are the best for the sector since January.
The purchasing managers index (PMI) figures from IHS Markit are given as a number between 0 and 100.
Anything above 50 signals growth, while anything below means a contraction in activity — so the higher the number is, the better things look for the UK.
Here’s IHS Markit’s chart of the PMIs longer-term trend:
The PMIs seem to suggest that British businesses are now shrugging off the initial shock of the vote, getting back to normal. As Chris Williamson, Chief Business Economist at IHS Markit notes (emphasis ours):
“Business activity is growing at a rate consistent with solid economic growth of 0.4-0.5% in the fourth quarter (the surveys suggest the initial 0.5% GDP growth estimate for the third quarter could be revised slightly lower). What’s especially reassuring is that growth is also becoming more balanced. Manufacturing is leading the expansion as exporters benefit from the weaker pound, but services growth is also reviving and construction is being boosted by renewed house building.”