UK services sector growth eases as post-election rebound loses momentum

The UK’s services sector saw growth ease back last month as its post-election rebound lost momentum, according to new figures.

An influential survey of UK firms also showed that inflation in the prices charged to customers fell to the lowest since February 2021, in a boost for the Bank of England.

The closely watched S&P Global UK services PMI survey scored 52.4 in September, slowing from 53.7 in August.

It was slightly below the 52.8 reading forecast by a consensus of economists.

The headline score remained above the 50.0 threshold for the 11th month in a row, which means that activity in the sector is still growing.

Tim Moore, economics director at S&P Global Market Intelligence, said: “The September PMI surveys suggest that the UK economy is still on a positive trajectory, with improving order books accompanied by cooling inflationary pressures.

“UK service providers indicated a moderate expansion of activity in September, fuelled by resilient business and consumer spending.

“However, the post-election rebound lost some momentum as output, new work and employment all increased at the slowest pace for three months.”

Firms said that business activity was “boosted by rising domestic demand”, particularly in relation to technology, real estate and leisure services.

New business volumes also continued to grow over the month, with the rate of growth close to the 14-month high reported in July.

Nevertheless, the figures also highlighted that some surveyed companies cited cautious decision-making among corporate clients and an impact from stretched household incomes.

Service providers also noted that “policy uncertainty ahead of the autumn Budget on October 30 had encouraged a wait-and-see approach” to investment decisions from major clients.

The latest research also highlighted that cost burdens on firms increased at a sharp and accelerated rate in September, partly linked to higher wages.

However, it found that inflation on prices charged to customers slowed to its lowest level since February 2021 as competition impacted businesses’ ability to pass higher pricing on to customers.