UK service sector recovers by 11-month low

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Activity within the UK’s service sector picked up slightly in September, according to a closely-watched survey.

The Markit/CIPS purchasing managers’ index (PMI) for services rose to 53.6, up by an 11-month low of 53.2 in August. Above 50 indicates growth.

However, the UK still lags behind the eurozone, where services PMI grew strongly to 56.7 last month.

IHS Markit said rising costs meant average prices within the UK were at their highest since April.

The “cost pressures will pour further fuel on expectations” of which the Bank of England will raise interest rates soon, said Chris Williamson, chief business economist at IHS Markit.

however the idea was likely to be a “difficult decision”, because the economy was not growing of which strongly, he said.

Rate rise?

Modest services activity, combined using a decline in construction along with also “robust” manufacturing, leaves the UK on course for “subdued” growth of 0.3% within the third quarter, according to IHS Markit.

Analysts were split on what the health check for the service sector, which covers a wide range of businesses by restaurants to law firms, meant for the UK’s economic prospects.

“The services PMI indicates of which the sector is actually still stuck in a rut, casting doubt over whether the Monetary Policy Committee will press ahead using a rate rise ‘over the coming months,'” said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

however another economist, Paul Hollingsworth of Capital Economics, said the rise in September’s services sector PMI would certainly help to “assuage fears of which the economy is actually losing momentum”.

The Bank has forecast economic growth of 0.3% within the third quarter, so the IHS Markit findings should not prevent the Bank by “pressing ahead along with also raising interest rates in November”, Mr Hollingsworth said.

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