The S&P Global services purchasing managers' index (PMI) rose to 52.8 from 52.1 in September, indicating expansion. The survey also found services firms hired additional staff in October, ending two years of job cuts in the sector.
The Bank's monetary policy committee (MPC) has been divided over the pace of rate rises in recent months, but a majority is expected to vote for a quarter-point increase. Consumer price inflation rose to 3.5% in September from 3.1% in August.
Moore said the survey suggested an “increase in economic resilience despite challenges from geopolitical tensions, elevated cost pressures and subdued consumer confidence.” He noted that about four in ten services firms reported higher input prices, while only 1% saw a decline. Financial markets anticipate three further rate increases, but most City economists expect inflation to peak next spring, limiting additional moves to one or two.
Matt Swannell, chief economic adviser to the Item Club, cautioned that growth in business-to-business services was not matched on the high street, which has been hit by a dip in consumer confidence. He described a “two-speed economy” in which consumer-facing services will come under increasing pressure as households' spending power is squeezed.
Rob Wood, chief UK economist at Pantheon Macroeconomics, said there was a sign that services businesses were absorbing costs, but not by enough to prevent a rate rise. He said the estimate was consistent with underlying services inflation of about 4.1%, down from the official reading of 4.4% but still too high for the MPC to hold off.
Meanwhile, inflation in the eurozone rose to a three-year high of 4% last month, making a rate rise by the European Central Bank more likely in December.