The service sector in the UK slowed by more than expected to a 17-month low in October, according to a report from business analysts Markit/CIPS.

The purchasing manager’s index, a key economic indicator of the private sector, showed growth, albeit slow, in the service sector and follows PMI surveys that showed a slowdown in both the construction and manufacturing sectors.

David Noble, group chief executive officer at the Chartered Institute of Purchasing & Supply, said: “This month appears to be a slowdown month as the services sector comes off the boil, challenged by capacity constraints, increased backlogs and a slight reduction in new business growth.

“Procurement professionals reports tiptoeing through a time of uncertainty, as suppliers demonstrate stronger bargaining power in tighter market conditions.

“After the scramble to regain former heights seen in the last year comes a period of reflection and re-balance while positive sentiment remains high and levels of staffing are increased. Coupled with the rise in employment levels comes increased input prices with higher wage demands and more competition.

“Finally, with a possible interest rate rise looming and an associated dampening in confidence, the sector simmers at a more even temperature.”