British Services Firms Face Rising Costs and Prices in September

British service firms faced increasing cost pressures in September, driven by rising fuel prices linked to the Middle East conflict. The S&P Global Purchasing Managers’ Index (PMI) for the services sector dropped slightly to 52.1 from 52.5 in August, marking its joint-weakest growth since June. Tim Moore, economics director at S&P Global Market Intelligence, noted that surging fuel costs led to the sharpest increase in prices charged by service sector companies since May, reversing the slowdown observed earlier in the year.

Input cost inflation for British services companies reached its highest level since June, fueled by higher wages and fuel prices. Over a third of firms reported rising average cost burdens. The measure of prices charged by companies also hit a nine-month high, raising concerns at the Bank of England about potential inflationary pressures.

Employment in the sector continued to decline for the 24th consecutive month, the longest period of decline since records began in 1997. Business sentiment for the year ahead decreased from August’s seven-month high due to weak demand and persistent cost pressures.

The composite PMI, which includes the manufacturing industry, eased to 52.0 from 52.5, the lowest since June but still indicating growth above the 50.0 threshold.