By Chris Dorrell
A steep downturn in services saw economic activity contract at its fastest pace since the beginning of 2021 raising the risk of a recession, a closely watched survey suggested.
S&P Global’s Purchasing Managers’ Index (PMI) for the UK economy came in at 46.8 – far below the 50 reading which indicates flat growth. The PMI assesses the health of an economy’s services and manufacturing sector.
Analysts had predicted a reading of 48.7 this month.
The UK’s all important services sector fell to 47.2, a 32-month low and down from 49.5 last month.
Manufacturing meanwhile saw a slight improvement, rising to 44.2 – a two month high.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence said: “The disappointing PMI survey results for September mean a recession is looking increasingly likely in the UK.
“The steep fall in output signalled by the flash PMI data is consistent with GDP contracting at a quarterly rate of over 0.4 per cent, with a broad-based downturn gathering momentum to hint at few hopes of any imminent improvement,” he continued.
In July the economy contracted 0.5 per cent, with some analysts saying the UK may already be in recession.
The Bank of England updated its growth forecasts for the remainder of the year, warning that GDP would rise “only slightly” in the third quarter while underlying growth would be “weaker than expected” too.
More to follow
