Growth softens across UK businesses in September: PMI
The index for the services sector, which dominates Britain’s economy, fell to 52.8 from 53.7 in August, below a poll consensus of 53.5
A SURVEY showed that British businesses reported a slowdown in growth this month, as well as waning price pressures in the country, potentially encouraging the Bank of England (BOE) to consider cutting interest rates again.
The preliminary estimate of the UK S&P Global Composite Purchasing Managers’ Index (PMI) fell to 52.9 from 53.8, below a median forecast of 53.5 in a Reuters poll of economists, but still well above the 50 level that separates growth from contraction.
Data company S&P Global said the figures were consistent with Britain’s economy expanding at a quarterly rate of 0.3 per cent, about half the pace of earlier this year. However, that kind of expansion would be stronger than the typical pace of the past two years.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said the survey showed a welcome mix of growth and easing inflationary pressures.
“The data therefore hints at a ‘soft landing’ for the UK economy, where the fight against inflation is showing increasing signs of being won without higher interest rates having caused a downturn,” he said.
Input costs faced by companies rose at a faster rate in September, but companies have increased the prices they have been charging since at least February 2021. They have also turned cheerier about the outlook, helped by the relative stability in the economy.
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The BOE said last week it would be cautious about cutting interest rates after a first reduction in August as it awaits clearer signs on inflation.
A Reuters poll of economists published earlier this month suggested the central bank will cut borrowing costs just once more this year, in November.
S&P Global said the biggest concern voiced by firms related to uncertainty about the Oct 30 Budget, when new Finance Minister Rachel Reeves will publish her first tax and spending plans.
Williamson said investment projects were being put on ice pending clarity on the new government’s policies, especially towards taxation.
The PMI for the services sector, which dominates Britain’s economy, fell to 52.8 from 53.7 in August, again below the poll consensus of 53.5.
Growth weakened a bit more sharply among factories, with the manufacturing PMI falling by a full point to 51.5. REUTERS
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