Signs of weaker conditions in the UK economy have emerged with new figures showing that growth the dominant services sector continues to slow.
Today’s purchasing managers’ index (PMI) report from Markit and the Chartered Institute of Procurement & Supply (Cips) reveals that September witnessed the third successive month of cooling output as some firms reported hesitation among clients in placing new contracts, linked to global economic uncertainty.
Although the 53.3 reading remains above the 50 level that separates growth from contraction, the figure was lower than the previous month’s 55.6 and indicates the weakest rate of growth since April 2013.
The report comes after the headline PMI figure for the services sector – which accounts for more than two-thirds of the UK economy – hit a 27-month low in August.
Chris Williamson, chief economist at survey compiler Markit, said: “The rate of economic growth slowed to a two-and-a-half year low in September, according to PMI survey data, suggesting that the economy sank further into a soft patch at the end of the third quarter.
“The survey data indicate that GDP growth slowed to 0.5 per cent in the third quarter, but that the economy is entering the fourth quarter at a pace down to just 0.3 per cent.”
The UK economy expanded by 0.7 per cent during the second quarter of the year, according to the third and final set of official figures published by the Office for National Statistics last week.
However, year-on-year growth in the second quarter was trimmed to 2.4 per cent, down from the previously reported 2.6 per cent.
Howard Archer, chief UK and European economist at IHS Global Insight, said: “We have been expecting GDP growth to slow to 0.5 per cent quarter-on-quarter in the third quarter from 0.7 per cent in the second, but there now looks to be a very real risk that it could come in no better than 0.4 per cent.”
He added: “It is hard to take any positives from this report and it will certainly fuel expectations that the Bank of England will not be hiking interest rates until well into 2016.”