Britain’s services sector slowed to a standstill in September after 18 months of successive growth, amid soaring energy prices.
The move led business expectations for the next 12 months dropping to their lowest level since May 2020, according to S&P Global and the Chartered Institute for Procurement and Supply.
The Purchasing Managers index survey showed 50, the weakest performance since February 2021 – a reading above 50 signals growth and below indicates contraction, meaning the sector flatlined.
Weakness in the UK economy
New orders also declined for the first time in 19 months.
John Glen, chief economist at CIPS, said: “More evidence of weaknesses in the UK economy appeared last month as the services sector flatlined in September, falling to the no-change mark with fewer orders and higher costs affecting output.
“The new business index was the lowest since February 2021 as domestic consumers had cost-of-living pressures and not hospitality uppermost in their minds.
“After enjoying rising levels of export orders for eight months in a row, the ongoing effects of Brexit and trade difficulties also reduced overseas enquiries for service companies.”
UK economy: hope for growth?
Glen noted while 39% of respondents were hopeful that business opportunities would grow, – down on the 60% of firms that were hopeful for growth at the beginning of the year.
Glen said this marked a “significant downturn and a clear indication of the trajectory this year”.