LONDON?The U.K.'s powerhouse services sector grew strongly in October after shrinking sharply in the immediate aftermath of Britain's June vote to leave the European Union, a survey showed on Thursday.

The purchasing managers index for the services sector, which accounts for some 80% of annual economic output in Britain, came in at 54.5, significantly above the expectations of economists polled by The Wall Street Journal, who expected only a slight uptick, and nearly two points above September's reading. Readings above 50 signify growth.

New contracts in the industry rose at the fastest rate in nine months, as confidence improved and the weakened pound boosted international demand, said IHS Markit, which compiles the index.

However, weak sterling was also driving up costs, the data showed, with input price inflation surging to its highest since March 2011.

"An encouraging picture of the economy gaining further growth momentum in October is marred by news that inflationary pressures are rising rapidly," said Chris Williamson, chief business economist at IHS Markit.

Write to Wiktor Szary at Wiktor.Szary@wsj.com

(END) Dow Jones Newswires

November 03, 2016 06:55 ET (10:55 GMT)

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