–Adds Detail. Composite PMI To Version Transmitted At 0938 GMT
–UK Oct Composite PMI 51.0 Vs 52.7 In Sep
–UK Oct CIPS/Markit Services PMI 51.3 Vs Sep 52.9
–UK Oct CIPS/Markit Prices Charged 48.6 Vs Sep 50

LONDON (MNI) – UK economic activity continued to grow at the start
of the fourth quarter, but at a slower rate than at the end of the third
quarter, the CIPS/Markit surveys showed.

The CIPS/Markit all-sector October PMI dropped to 51.0 from 52.7 in
September, with analysts saying fourth quarter growth could be flat or
even negative.

The October CIPS/Markit services index for October, published by
Reuters, came in at 51.3, down from 52.9 in September. This was below
analysts’ median forecast for a 52.0 outturn but at least in positive
territory after the collapse of manufacturing activity.

The service sector data are the third of CIPS’ October trilogy. The
October manufacturing Purchasing Managers Index fell sharply back into
contractionary territory, dropping through the 50 breakeven level to
47.4 from 50.8 in September.

The construction index, however, spiked to 53.9 from 50.1,
highlighting the volatility of the monthly CIPS data.

The composite October PMI. published following the services data
Thursday, dropped to 51.0 from 52.7 in September.

“A downturn in the all-sector PMI signals a stagnation of GDP in
October, and a worsening trend in new orders suggests that the survey
data may worsen in coming months, adding to the risk of the economy
sliding back into contraction in the fourth quarter,” Chris Williamson,
Markit’s chief economist, said.

“This seems consistent with roughly zero GDP growth in Q4, possibly
even a contraction,” George Buckley, economist at Deutsche Bank, said
following the services data.

The services survey showed inflation pressures easing markedly.
Prices charged fell to 48.6 from September’s 50 reading, the first
reading showing falling prices, that is a below 50 reading, since
September last year.

Markit said business confidence for future activity hit its
highest level since May.

Some Bank of England Monetary Policy Committee members have warned
growth could turn negative in the fourth quarter, and the relatively
weak October CIPS services data clearly leave this possibility open.

“The forward-looking indicators from the survey suggest that a
worsening trend of business conditions is likely as we move towards the
end of the year,” Williamson said.

–London newsroom 0044 207 862 7491; email:drobinson@marketnews.com

[TOPICS: M$B$$$,M$BDS$,MABDS$]