The services sector grew at its weakest pace in two years in October, highlighting the underlying difficulties facing the economy.
The Markit/Cips services PMI posted a weaker-than-expected 50.6 in October, showing that the sector is still expanding but at a much slower pace than in September, when the headline rate was 52.2.
The data means the Bank of England’s monetary policy committee (MPC) faces a tough decision this week as it ponders whether to extend its programme of quantitative easing.
Howard Archer, economist at IHS Global Insight, said: “The October services purchasing managers’ survey is disappointing, and fuels concern that the economy is struggling to develop even modest underlying growth despite the better-than-expected rebound in GDP in the third quarter.
“The survey certainly keeps open the possibility that the Bank of England could go for more quantitative easing at the conclusion of the November MPC meeting on Thursday.”
He said that while he still expected the committee would hold off from more QE for now and monitor how the economy is developing, it was “an extremely tight call”, with the possibility of the bank compromising with a smaller than usual £25 billion injection.
