Data released by S&P Global/CIPS showed that activity growth in the UK private sector slowed in September, reaching its lowest level since June. Meanwhile, prices charged inflation in the service sector - barometer of domestic inflationary pressures - edged down to its lowest since February 2021.
The UK composite PMI fell to 52.6 points from 53.8 points in August. Economists had expected a drop to 52.9 points. Meanwhile, the services PMI declined to 52.4 points (3-month low) from 53.7 points in August. Consensus estimates suggested a decrease to 52.8 points. Both indices remain above the 50-point mark, which indicates an expansion of activity in the sector, for the 11th month in a row.
The report showed that business activity was boosted by rising domestic demand, especially in relation to spending on technology, real estate and leisure services. New orders in the services sector rose again in September, with the strongest growth rate in 14 months. However, service providers noted that policy uncertainty ahead of the Autumn Budget on 30th October had encouraged a wait-and-see approach to major investment decisions among clients. Meanwhile, export orders continued to grow at a slower pace than the total volume of new orders. Respondents often pointed to difficult market conditions and the adverse impact of EU trade frictions. Employment growth in the service sector slowed significantly, and reached a 3-month low. Cost burdens increased at a sharp and accelerated pace in September, which was often linked to rising salary payments. Meanwhile, business activity expectations for the year ahead have increased since August and remained generally optimistic, despite the fact that many companies noted uncertain short-term fiscal policy prospects. The positive sentiment was associated with a softening of inflationary pressures and stable domestic economic conditions.