Image copyright Chris Ratcliffe

The UK service sector "moved up a gear" in October according to a closely watched survey of purchasing managers.

The Markit/CIPS services purchasing managers' index (PMI) rose to 54.5 last month, from 52.6 in September - the highest level since January.

However the weaker pound is making life more expensive for firms, with their inflation costs running at the highest rate since March 2011.

Employment in the sector rose for the third month running, the survey showed.

"The dominant UK service sector moved up a gear at the start of the final quarter of 2016," the report said.

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

"The increase in prices threatens to curb both corporate hiring and consumer spending, as firms seek to reduce staff costs and households see their pay eroded by rising inflation," he said.

The survey indicated that new contracts rose at the fastest rate in nine months, with the weaker pound helping generate new business opportunities.