Investing.com - U.K. service sector activity expanded at a faster than expected rate in October, boosting optimism over the health of the economy and supporting the case for higher interest rates, industry data showed on Wednesday.
In a report, market research group Markit said the seasonally adjusted Markit/CIPS Services Purchasing Managers Index increased to 54.9 last month from a reading of 53.3 in September. Analysts had expected the index to rise to 54.5 in October.
On the index, a level above 50.0 indicates expansion in the industry, below 50.0 indicates contraction.
Despite the improvement, the rate of expansion was still the second-weakest since May 2013.
New business growth failed to accelerate from September’s 29-month low. Moreover, the 12-month outlook for activity was the weakest in two-and-a-half years.
Input price inflation slowed to one of the weakest rates of the past six years, and charges levied by service providers rose only marginally.
Commenting on the report, Chris Williamson, Chief Economist at survey compilers Markit said, “The survey data point to GDP rising at a quarterly rate of 0.6% at the start of the fourth quarter, up from 0.5% in the third quarter."
GBP/USD was trading at 1.5432 from around 1.5416 ahead of the release of the data, while EUR/GBP was at 0.7080 from 0.7087 earlier.
Meanwhile, European stock markets remained higher. London’s FTSE 100 rose 0.8%, the EURO STOXX 50 tacked on 0.6%, France's CAC 40 advanced 0.9%, while Germany's DAX inched up 0.1%.