Service Sector Activity Better Than Expected But Weakest Since January

The S&P Global/CIPS UK Services PMI Business Activity index fell from 49.5 in August, to 49.3 in September, its lowest since January 2023, and below the 50 threshold that marks neutral growth for the second month running.

However, this was a significant upgrade from the earlier "flash" estimate of 47.2 and beat analysts' expectations.

UK recession 'can still be avoided' as GDP grows 0.2% in Q2

Customers showed subdued demand and kept tighter reins on their non-essential spending, creating a "sustained downturn" in UK service sector output, the S&P survey found.

Job cutbacks were at their highest level since January 2021, during the height of the Covid-19 pandemic, as hiring budgets have been squeezed and voluntary leavers are not being replaced.

Service providers experienced a "renewed fall in employment" in part due to costs, and "sluggish" business conditions.

As a result, total new work decreased slightly during September, and export sales dropped for the first time since November 2022.

Weakest rise in UK private sector output for six months 'reignites recession worries'

John Glen, chief economist at Chartered Institute of Procurement & Supply (CIPS), said September signalled "a change in direction for the services sector".

After strong activity in the spring and a sustained summer of business, autumn brought lower rates of new orders and "the bright spots of job creation dimmed", he said.

Glen added: "The UK economy is still showing signs of strain, and the impact of interest rate rises are [still] having an effect. Consumers are concerned by the higher cost of living and expenses continuing to rise, especially fuel costs, and are reigning in spending accordingly."

Weaker consumer demand for services was mirrored by falls in the broader economic outlook, which negatively impacted customer spending.

However, business activity expectations for the year ahead are "optimistic", and up to a three-month high, with half of survey respondents forecasting a rise in activity levels over the next year, with only 14% predicting a decline.

RECENT NEWS

Mitigating Risks In The Bond Market: Strategies For Uncertain Times

In today's volatile bond market, characterized by liquidity concerns and rising interest rates, effective risk managemen... Read more

UK High Street Banks Rake In £9.2 Billion In Interest On BoE Reserves: A Closer Look

In the intricate world of finance, where numbers often tell compelling stories, one recent figure stands out: £9.2 bill... Read more

Powell's Pledge: Federal Reserve Chair Signals Prolonged Period Of Higher Rates

Federal Reserve Chair Jerome Powell's recent statements have stirred significant interest in financial markets, particul... Read more

European Funds Body Throws Support Behind French Capital Markets Union: Implications For Brexit-Era Finance

In a significant development for European finance, a European funds body recently threw its support behind the French ca... Read more

Federal Reserve's Rate Decision: Navigating Economic Uncertainty

The recent decision by the Federal Reserve to adjust interest rates has sparked significant interest and speculation amo... Read more

Building Bridges: Strengthening Investor Confidence Through Enhanced Risk Data In Emerging Markets

In the dynamic landscape of emerging markets, investor confidence plays a pivotal role in driving economic growth and pr... Read more