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UK service sector activity hit an eight-month low in September, new data on Wednesday showed.
The headline seasonally adjusted services PMI business activity index registered 49.3 points in September, down from 49.5 in August. This was better than the flash estimate of 47.2.
This marks the second consecutive month that the reading has been below the 50.0 point mark. It was also the lowest level recorded since January.
‘Reduced volumes of service sector activity were attributed to sluggish business conditions, heightened risk aversion among clients and downward pressure on demand in the wake of rising borrowing costs,’ S&P said.
However, it noted that business activity expectations for the year ahead remained optimistic overall and edged up to a three-month high in September.
The UK seasonally adjusted composite PMI posted 48.5 points in September, down slightly from 48.6 in August. Nonetheless, this was higher than the composite flash estimate of 46.8.
The UK manufacturing sector remained in decline last month, according to survey data on Monday. The latest S&P Global/Chartered Institute of Procurement & Supply UK manufacturing PMI rose to 44.3 points in September, from August’s tally of 43.0 in August.
‘The UK economy is still showing signs of strain and the impact of interest rate rises are having an effect. Consumers are concerned by the higher cost of living and expenses continuing to rise especially fuel costs and are reining in spend accordingly,’ said John Glen, chief economist at the Chartered Institute of Procurement & Supply.
‘Firms are also experiencing squeezed business costs but with the lowest input cost rise since April 2021, there is some room for manoeuvre to reduce prices charged, especially as competition has intensified amongst service providers.’
The composite PMI is a weighted average of the UK’s manufacturing and services PMIs, compiled by S&P Global from responses to surveys sent to 650 services companies and 650 manufacturers, with data collected between September 12 and 27.
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