UK businesses hit by high costs amid "sluggish" growth in September
(Alliance News) - Subdued domestic economic conditions and geopolitical uncertainty impacted UK businesses in September, with growth in the services sector slowing more than expected, while manufacturing outperformed a little, data published on Wednesday showed.
The S&P Global flash UK purchasing managers' composite output index fell to 51.7 points in September from 52.5 points in August. Falling toward the neutral 50-point mark that separates growth from contraction, it indicates the pace of activity slowed in September.
The flash services PMI business activity index worsened to 51.7 points in September from 52.5 points in August, underperforming against the FXStreet-cited consensus of a softer fall to 52.0 points.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said: "September is seeing a worrying combination of disappointingly sluggish economic growth and intensifying inflationary pressures, with subdued business confidence and high costs meanwhile continuing to discourage hiring."
Service providers noted subdued domestic economic conditions and ongoing geopolitical uncertainty, although some companies reported a boost in demand for technology services.
S&P Global said: "AI investment and greater defence spending were highlighted as factors supporting manufacturing production, while weak consumer demand was reported as a growth headwind."
The flash manufacturing index unexpectedly improved to 52.0 points in September from 51.7 points in August. The FXStreet-cited consensus was for a decline to 51.4 points in September.
However, the manufacturing output index declined to a 6-month low of 51.4 points in September from 52.1 points in August.
The S&P's Chris Williamson said: "Growth, business confidence and employment are all being hamstrung by high energy prices, elevated business costs, geopolitical worries, higher market borrowing costs and uncertainty over government policy at home in the run up to the autumn budget.
"While the upturn in the survey's price gauges suggest the Bank of England looks likely to keep a hawkish bias, the worryingly lacklustre pace of business growth underscores the risk to the economy from higher borrowing costs."
The flash PMI survey draws upon a panel of around 1,300 companies in the UK manufacturing and service sectors, with responses collected between September 10 and 21.
Full UK manufacturing PMI data will be released next Thursday, to be followed by services data on October 5.
By Tom Budszus, Alliance News slot editor
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