Service sector grows at weakest for five months amid pre-Budget caution

The UK’s service sector saw growth slow to its lowest level for five months in September as consumer confidence slipped, according to new figures.

Firms including restaurants, pubs and hotels were impacted by business clients deferring spending “until after the autumn Budget” and hesitancy from households about big purchases.

The S&P Global UK services PMI survey scored a reading of 50.8 for the month, falling from a previous 16-month-high of 54.2 in August.

Any reading above 50.0 means the sector is growing, while any score below means it is contracting.

The closely-watched survey was weaker than expected, with economists having predicted a reading of 51.9 for September.

Tim Moore, economics director at S&P Global Market Intelligence, said: “UK service providers experienced a disappointing end to the third quarter as weak consumer confidence, delays to business spending decisions and falling exports all weighed on demand.

“Business activity expansion hit a five-month low, while new order gains were much softer than the 11-month high seen in August.

“Consequently, this summer’s acceleration in output growth is now looking like a flash in the pan as elevated political and economic uncertainty has reasserted itself as a constraint on service sector performance.”

The research indicated that many companies saw growth ease due to “subdued economic conditions” and increased uncertainty.

Nevertheless, others also cited that recent investment and expansion efforts had helped to drive stronger output in September.

Elsewhere, the data showed that incoming new work grew only marginally for the month, while export sales swung to a decline after increasing at their fastest rate for 10 years in the previous month.