UK Services Firms Face Rising Costs and Prices Amid Middle East Conflict

British services firms faced a sharp rise in costs last month, driven by surging fuel prices amid the Middle East conflict. The S&P Global Purchasing Managers’ Index (PMI) for the services sector fell slightly to 52.1 in September from 52.5 in August, marking the weakest growth since June. The increase in input costs reached its highest level since June, with wages and higher fuel prices being key contributors. More than a third of firms reported rising cost burdens.

Prices charged by service sector companies also climbed to their highest since May, signaling a potential reversal of the slowdown observed earlier in the year. This trend could heighten concerns at the Bank of England about inflation. Employment in the sector continued to decline for the 24th consecutive month, the longest stretch of job cuts since records began in 1997.

Business sentiment for the year ahead dipped slightly from August’s seven-month high, attributed to weak demand and persistent cost pressures. The composite PMI, which includes manufacturing, eased to 52.0 from 52.5, the lowest since June but still indicating growth.