UK services output falls in October

Service sector output in the UK decreased by 0.7% month-on-month in October, the government’s figures show.

The Office for National Statistics’ (ONS) index of services attributes the fall to slowing output in a number of sub-sectors.

“The decline in October is mainly due to weakness in transport, storage and communication, which decreased by 2.5%, and business services and finance, which decreased by 0.7%,” the ONS report says.

In addition, the index shows the seasonally-adjusted index of services increased by 1.1% in October, compared with one year earlier.

Growth in government and other services, business services and finance, and distribution, hotels and restaurants contributed to year-on-year output growth. The transport, storage and communication sub-sector acted as a drag on growth.

Services are the driving force behind UK economic growth, contributing as much as three-quarters of GDP under some models.

Howard Archer, the chief UK and European economist at IHS Global Insight, says: “The reported sharp fall in services output in October is a major blow to GDP growth prospects and significantly fuels concern that the economy could contract in the fourth quarter.”

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