UK services sector growth slows to five-month low in September

Investing.com -- The UK services sector experienced a significant slowdown in growth during September, with the S&P Global UK Services PMI Business Activity Index falling to 50.8 from August’s 16-month high of 54.2.

The latest reading, while still above the neutral 50.0 threshold, marked the weakest expansion in five months and indicated only modest growth in activity.

New business increased only slightly during September, decelerating sharply from the previous month.

Many service providers reported clients’ reluctance to commit to new orders due to rising political and economic uncertainty, with several noting that uncertainty ahead of the Autumn Budget had led to delayed spending decisions.

Export sales reversed course in September, returning to contraction after expanding at the fastest rate in 10 months during August. Survey respondents frequently cited challenging conditions across global markets as a factor in declining international orders.

Employment in the service sector continued to fall, extending the decline to 12 consecutive months. The pace of job cuts accelerated as firms implemented cautious hiring strategies amid weak sales pipelines and pressure on margins from rising staff costs.

Many businesses reported reducing headcount by not replacing voluntary leavers.

Input cost inflation remained sharp in September, with businesses citing higher wages, food prices, utility bills, and technology costs. However, the rate of cost increases slipped to the second-lowest level in 2025 so far.

Price increases charged by service providers grew at the slowest pace since June, influenced by greater competition for new work.

The broader S&P Global UK PMI Composite Output Index, which measures activity across both services and manufacturing, dropped to 50.1 in September from 53.5 in August, indicating virtually unchanged business activity levels across the private sector economy.

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."

He added that "this summer’s acceleration in output growth is now looking like a flash in the pan" as political and economic uncertainty has constrained service sector performance.

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