The final composite output index rose to 51.8, up from the flash estimate of 51.7, but down from September's final 52.6 and its lowest print since November 2023. While the latter half of October performed slightly better than the earlier half, there has still been a slowdown in the rate of expansion in private-sector economic activity. This is reflected in a smaller increase in new orders, a modest decline in employment and an easing in input cost inflation on the back of much softer cost pressures in the manufacturing sector.

The service sector index rose to a final 52.0, up from the 51.8 flash estimate but down from September's final 52.4. As seen in the composite index, the latter half of the month saw services modestly outperform the earlier half but, compared to September, monthly growth was still slower.

Demand continued to rise but cautious decision-making among clients was partly due to uncertainty ahead of the Autumn Budget on 30th October which delayed spending decisions. Geopolitical tensions also affected the willingness to spend. Employment growth slowed noticeably with rising wage costs cited as a key factor. Surprisingly service providers often noted stronger demand from EU clients, despite the ongoing trade frictions due to Brexit.

Employment remained a relatively weak spot in October with staffing numbers declining for the first time since December 2023.

Input cost inflation edged up to a three-month high, while the rate of output price inflation picked up from September's 43-month low. Uncertainty ahead of the Autumn Budget dampened business confidence and optimism dropped to the lowest in four months.

The UK RPI now stands at minus 20, and RPI-P at minus 3, showing overall economic activity running slightly ahead of forecasts but the real economy performing much as expected. Today's update will not impact solid expectations for a 25 basis point cut by the BoE on Thursday.

No change from the flash is expected for the composite at 51.7 and for services at 51.8.

The Services Purchasing Managers' Index (PMI) provides an estimate of service sector business activity for the preceding month by using information obtained from a representative sector survey incorporating transport and communication, financial intermediation, business services, personal services, computing and IT and hotels and restaurants. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) activity versus the previous month and the closer to 100 (zero) the faster is activity growing (contracting). The data are compiled by the Chartered Institute of Purchasing and Supply (CIPS) and S&P Global.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the ISM non-manufacturing index in the U.S. and the S&P Global PMIs elsewhere, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.

The S&P Global PMI services data give a detailed look at the services sector, how busy it is and where things are headed. The indexes are widely used by businesses, governments and economic analysts in financial institutions to help better understand business conditions and guide corporate and investment strategy. In particular, central banks in many countries use the data to help make interest rate decisions. PMI surveys are the first indicators of economic conditions published each month and are therefore available well ahead of comparable data produced by government bodies.