The UK’s service sector fell in September, but not by as much as first feared, according to figures released today.
The headline seasonally adjusted S&P Global/CIPS UK Services PMI business activity index was 49.3 in September, down from 49.5 in August.
Although this was the lowest level since January, it was above the earlier 'flash' reading for September of 47.2.
Businesses cited subdued demand and cutbacks to non-essential spending among clients but remained resilient for the outlook supported by hopes of a further moderation in inflationary pressures.
However, service providers reported a renewed fall in employment, in part due to cost considerations, and the rate of job shedding was the fastest since January 2021.
Tim Moore, economics director at S&P Global Market Intelligence, said: “Although only modest and slower than indicated by the earlier 'flash' PMI reading, the downturn in UK service sector output was the greatest seen since the beginning of this year and stood in contrast to solid growth during the spring months.”
Samuel Tombs at Pantheon Macroeconomics said: "We continue to look for quarter-on-quarter increases in GDP of 0.1% in Q3 and 0.3% in Q4."
But with labour market slack continuing to increase and the pace of price rises slowing, modest growth in economic activity won’t compel the Bank of England's Monetary Policy Committee to raise Bank Rate again, he believes.