UK service sector growth slips back, says PMI survey

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UK service sector activity fell in October from the previous month, but there was a marked improvement in business confidence, a survey suggests.

The Markit/Cips services purchasing managers' index (PMI) fell to 51.3 in the month, down from 52.9 in September. Any figure above 50 indicates growth.

But confidence hit its highest level since May, while input price inflation hit its lowest level for almost a year.

The service sector accounts for about two-thirds of UK economic activity.

Employment in the sector showed a "fractional decline" in October, <a href="http://www.markit.presscentre.com/imagelibrary/downloadMedia.ashx?MediaDetailsID=343" >the PMI survey said</a>.

"Another rather disappointing survey adds to fears that the UK recovery continued to lose momentum at the start of the fourth quarter," said Markit's chief economist Chris Williamson.

"Growth in the vast service sector slowed to a worryingly lacklustre pace in October. The sector made a strong contribution to economic growth in the third quarter, but this looks set to wane in the final quarter of the year."

Figures released this week showed the economy grew by 0.5% between July and September.

However, despite the improvement from the 0.1% growth recorded in the previous quarter, analysts warn the underlying economic recovery remains weak.

Earlier on Thursday, the National Institute for Economic and Social Research said there was a very real threat of the UK falling back into recession.