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TOP NEWS: UK private sector slumps to lowest level since early 2021

5th Oct 2022 10:06

(Alliance News) - The UK's private sector suffered its fastest decline in output since the start of 2021 in September, data from S&P Global showed on Wednesday.

The seasonally adjusted S&P Global/CIPS UK composite purchasing managers' index slipped to 49.1 in September from 49.6 in August. Market consensus, according to FXStreet, had predicted a reading of 48.4.

September's print marks the second straight month of contraction. Any figure below 50.0 denotes contraction, and a number above shows growth.

"Both manufacturers and service providers indicated lower volumes of incoming new work in September, with the seasonally adjusted index measuring new business volumes across the private sector as a whole the lowest for 20 months," S&P Global explained.

The headline seasonally adjusted S&P Global/CIPS UK services PMI business activity index inched lower to 50.0 in September from 50.9 in August.

On Monday, the manufacturing purchasing managers' index for September was 48.4 points, rising from 47.3 in August.

S&P Global added: "September data pointed to a loss of momentum for the UK service sector, with an 18-month period of output expansion coming to an end amid falling volumes of incoming new work. Shrinking client demand was widely attributed to pressure on household budgets from escalating inflation, alongside widespread pessimism about the economic outlook."

Tim Moore, economics director at S&P Global Market Intelligence, said the struggling services sector was hit by the continued energy crisis in the UK, which has hit consumer spending.

"Severe pressure on budgets in the wake of rising inflation, alongside deepening worries about the economic outlook, also led to a reversal in new order volumes for the first time since February 2021," he continued.

"Employment trends remained positive in September, with staff numbers increasing at a strong pace as service providers adjusted to post-pandemic requirements. However, the pace of job creation has now slowed for three months running amid greater caution about future growth and sporadic reports of hiring freezes."

The PMI is compiled by S&P Global from responses to questionnaires sent to a panel of around 650 service sector companies. The data was collected between September 12 and 28.

By Paul McGowan; [email protected]

Copyright 2022 Alliance News Limited. All Rights Reserved.

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