The UK service sector continued its expansion in September, buoyed by increasing domestic demand, although growth slowed compared to August, according to final survey data released by S&P Global on Thursday.
In September, the S&P Global Services Purchasing Managers' Index fell to 52.4, down from 53.7 the previous month. The preliminary reading was slightly higher at 52.8. Nevertheless, any figure above 50 signifies expansion within the sector.
New orders approached a 14-month high last seen in July, supported by reduced borrowing costs and stable domestic economic conditions.
However, the survey highlighted that policy uncertainties surrounding the Autumn Budget scheduled for October 30, 2024, led to clients adopting a cautious stance on major investment decisions.
Demand from overseas remained sluggish, with export orders growing at a slower rate than overall new business. This was attributed to challenging market conditions and the negative impact of EU trade frictions.
As a result, companies reduced hiring, with job creation slowing significantly since August, reaching its lowest point in three months.
On the cost front, price pressures increased due to rising salaries. Additionally, higher shipping expenses and increased spending on technology services contributed to elevated input price inflation. Despite these cost pressures, the rate of selling price inflation dropped to its lowest level since February 2021, constrained by competitive market dynamics.
Looking forward, businesses remained optimistic about the upcoming year, buoyed by easing inflationary pressures and stable domestic economic conditions.
The composite output index fell to 52.6 in September from 53.8 in August, marking the slowest growth in private sector activity over the past three months.
