British businesses are having their strongest month for activity since February as new orders grow and demand linked to artificial intelligence picks up, a survey published on Friday showed, Reuters reported from London on October 23.

Source: Reuters

The preliminary S&P Global UK Composite Purchasing Managers' Index rose to 53.1 in October, up from 52.0 in September and higher than any forecast among economists polled by Reuters, S&P Global said. A reading above 50 indicates growth.

Companies took on extra workers for the first time since hiring was hit by a tax increase in former finance minister Rachel Reeves' 2024 budget, the survey showed, adding to other signs of a recovery in the jobs market. Manufacturers had their strongest increase in output in more than two years, while services companies reported an acceleration in new orders, and some firms cited a sales boost from AI investment spending and rising demand for technology services, S&P Global said.

Some firms held off on spending ahead of next week's budget, which could mean more growth soon if finance minister John Healey avoids measures that hurt business, said Chris Williamson, chief business economist at S&P Global Market Intelligence, according to Reuters.

Price pressures remained strong. Cost inflation for businesses was the strongest since June, especially among manufacturers, although prices charged by companies increased less sharply than in September, the survey showed.

"Not only making a rate hike from the Bank of England at its upcoming policy meeting a near certainty but also likely shortening the odds of further rate hikes into 2027," Williamson said of the price pressures, according to Reuters. The Bank of England, which is worried the energy price surge from the Iran war might fuel broader inflation, is expected to raise interest rates for the first time in more than three years on November 5 — that is a market expectation reported by Reuters, not a Bank decision.