IHS MARKIT / CIPS UK SERVICES PMI figures for September released...
Latest IHS MARKIT / CIPS UK SERVICES PMI figures have been released....
The headline figure fell from August’s 58.8, which was the strongest reading since April 2015, to a level of 56.1 in September. The UK service sector continued its recent recovery, although growth across the services sector was uneven with gains principally focused on areas such as business-to-business services. Those sub-sectors more exposed to social contact such as Hotels, Restaurants & Catering reported a downturn in business during the month.....
KEY FINDINGS:
- Third successive month of growth, albeit at slower rate
- Rise in new business linked to improved market conditions
- Cost concerns lead to another round of job losses
After accounting for seasonal factors, the IHS Markit/CIPS UK Services PMI Business Activity Index fell from August’s 58.8, which was the strongest reading since April 2015, to a level of 56.1 in September. Although the lowest reading since June, the index nonetheless pointed to a marked rate of growth.
Supporting activity was a further increase in levels of incoming new work, also the third in successive months. With the withdrawal of the UK government's Eat Out to Help Out scheme, plus an introduction of some tighter restrictions on activity in September, growth in new business was softer than in August. A lack of international tourism was also reported to have weighed on foreign business, which overall continued to fall sharply."
COMMENTS.....
Chris Williamson, Chief Business Economist at IHS Markit, which compiles the survey said:
“The UK service sector showed encouraging resilience in September, with business activity continuing to grow solidly despite the government’s Eat Out to Help Out scheme being withdrawn. Unsurprisingly, spending in the restaurant sector slumped after spiking higher in August, and many other consumer services activities showed a similar slide back into contraction as renewed lockdown measures were introduced, causing the overall rate of expansion to moderate. “Optimism about the year ahead has meanwhile cooled somewhat, hinting that risks for coming months lie skewed to the downside. Companies grew increasingly worried about the impact of a second wave of virus infections and the gradual withdrawal of government support, especially the furlough scheme. Brexit worries are also rising again, causing hesitancy in spending and investment decisions. While the third quarter will inevitably see a strong economic rebound, growth in the fourth quarter looks likely to be far less impressive.”
Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, said:
"Though unable to maintain the highs from the previous month, September saw another steady improvement in trading conditions as reduced pandemic restrictions fuelled an expansion in services activity. "New orders from domestic markets grew for the third month in a row, and business-to-business firms enjoyed stronger growth. In particular operations connected to property purchasing, fuelled in part by stamp duty concessions did well. Consumer facing firms remained hampered by covidsecure measures and cautious customer spending. "Once again job losses remained the black spot amidst these pockets of recovery. With the seventh consecutive monthly drop in job numbers, redundancies have replaced job hiring in an attempt to shield firms from rising input costs but these strategies will devastate local communities. Business margins were squeezed further as firms sought to mitigate the impact of competition with discounting on their products and services. "There is little expectation that these disruptions will come to an end soon, so many businesses are planning to ‘tick over’ until year end as months of toil and trouble lie ahead."
See the full IHS MARKIT / CIPS UK SERVICES PMI bulletin.