PESSIMISM

The UK economy looks to have slowed in the third quarter despite the services sector rebounding in September from an 11-month low the month before.

The closely watched IHS Markit/cips services purchasing managers’ index (PMI) showed a reading of 53.6 last month, up from 53.2 in August and above economists’ expectations of 53.2. A reading above 50 indicates growth.

While the powerhouse industry served up a better performance than in August, new business growth still slumped to a 13-month low.

It comes after the manufacturing industry eased back in September, while construction contracted for the first time in 13 months.

The services sector accounts for about three-quarters of the UK economy, covering areas such as retail, pubs, restaurants, hotels, finance, transport and IT.

Respondents to the latest study cited tailwinds in September including robust labour market conditions and strong consumer spending, but concerns over the busi-

0 The sector accounts for about three-quarters of the UK economy

DUNCAN BROCK, CIPS ness outlook had been cited as a headwind against growth.

The balance of firms expected business activity growth over the next year slipping to its lowest level since June.

Chris Williamson, chief business economist at IHS Markit, said: “The services sector saw another month of modest growth, running in the middle ground between the robust expansion seen in manufacturing and the contraction recorded in construction.

“The three PMI surveys put the economy on course for another subdued 0.3 per cent expansion in the third quarter, but the fourth quarter could see even slower growth.

“Across all three sectors, inflows of new business in September were the lowest for 13 months, and business optimism about the year ahead slipped lower.”

Cost pressures in the services sector were biting in September, touching a seven-month high and causing the prices charged by such firms to jump at the fastest rate since April.

However, job creation was

“Whether there will be any significant bounceback towards the end of the year remains unlikely if the political landscape remains ambiguous.”