UK Services PMI Falls to 51.7 in September, Inflation Pressures Build Ahead of Budget

U.K. services activity growth slowed to a three-month low in September as inflation pressures intensified, according to preliminary S&P Global data released September 23. The Services Purchasing Managers' Index fell to 51.7 from 52.5 in August, missing a Reuters poll forecast of 52.0. Prices charged by services companies rose at the fastest pace in four months, with cost pressures accelerating after energy prices climbed amid the escalating war in Iran. S&P Global said the survey points to quarterly economic growth of about 0.1%, down from 0.4% in the second quarter. The weaker reading complicates the outlook for finance minister John Healey ahead of his October budget. Markets on September 22 priced roughly a 60% chance the Bank of England will raise interest rates on November 5. Manufacturing offered a counterpoint: the flash manufacturing PMI rose to 52.0 from 51.7, and sector optimism hit a seven-month high. The composite PMI fell to 51.7 from 52.5.