UK services sector faces rising costs and falling employment
British services firms faced mounting cost pressures in September, driven by surging fuel prices linked to the Middle East conflict. The S&P Global Purchasing Managers’ Index (PMI) for the sector slipped to 52.1 from 52.5 in August, marking the weakest growth since June. Tim Moore, economics director at S&P Global Market Intelligence, noted that input cost inflation reached its highest since June due to rising fuel and wage expenses.
More than a third of firms reported higher average cost burdens, leading to the sharpest increase in prices charged by service sector companies since May. This trend raises concerns at the Bank of England about a potential resurgence in inflation. Employment in the sector continued to decline for the 24th consecutive month, the longest streak of job cuts since records began in 1997.
Business sentiment for the year ahead also 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.