UK Services Activity Loses Growth Momentum In September

(RTTNews) - The UK service sector logged the weakest performance in nineteen months in September, as the energy crisis continued to hit business and consumer spending, final data from S&P Global showed Wednesday.

The Chartered Institute of Procurement and Supply final services Purchasing Managers' Index stood at a neutral threshold of 50.0 in September, down from 50.9 in the previous month. The flash score was 49.2.

A score above 50 indicates expansion, while a reading below 50 suggests contraction in the sector.

Further, the latest score pointed to the weakest service sector performance since the national lockdown in February 2021.

New orders fell for the first time in nineteen months, though marginally. New export business also fell amid Brexit-related trade difficulties and weaker global economic conditions.

Despite lower new business, backlogs increased in September because of supply shortages and difficulties filling staff vacancies.

Employment levels showed a solid rise in September, largely reflecting efforts to align staffing numbers with post-pandemic requirements. Nonetheless, the rate of job creation eased to its weakest since March 2021.

Service providers are still facing increased cost pressures, linked to rising energy costs, higher staff wages and supplier price hikes. However, the rate of inflation continued to ease from May's peak.

Looking ahead, business activity expectations for the year ahead weakened in September, with the index signalling the lowest level of optimism since May 2020.

The composite output index remained in negative territory in September, falling to 49.1 from 49.6 in August. The contraction was largely attributed to a considerable downturn in manufacturing production.