GROWTH of the UK’s dominant services sector slowed sharply in September to its weakest pace in two-and-a-half years, a survey has revealed.
The survey, published by the Chartered Institute of Procurement & Supply, raises further questions over the momentum of the UK economic recovery.
A report published last week by CIPS showed that the UK manufacturing sector had recorded one of its weakest quarters in two years in the three months to September.
CIPS’s business activity index for the UK services sector fell from 55.6 in August to 53.3 in September on a seasonally-adjusted basis. While above the level of 50 deemed to separate expansion from contraction, the index signalled the weakest monthly growth in services activity since April 2013.
Chris Williamson, chief economist at CIPS survey compiler Markit, highlighted signs of a sharp slowdown in UK economic growth.
He said: “The rate of economic growth slowed to a two-and-a-half year low in September, according to PMI (purchasing managers’ index) survey data, suggesting that the economy sank further into a soft patch at the end of the third quarter.
“The survey data indicate that GDP growth slowed to 0.5 per cent in the third quarter, but that the economy is entering the fourth quarter at a pace down to just 0.3 per cent.”
The UK economy grew by 0.7 per cent in the second quarter.
Mr Williamson said: “Weakness is spreading from the struggling manufacturing sector, hitting transport and other industrial-related services in particular. There are also signs that consumers have become more cautious and are pulling back on their leisure spending, such as on restaurants and hotels.
“Wider business service sector confidence has meanwhile also been knocked by global economic worries and financial market jitters.”
CIPS’s surveys have also shown a slowdown in new business growth in the manufacturing and services sectors between August and September.
Mr Williamson warned there was “a strong likelihood” that the economic slowdown could “intensify in coming months”.
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