UK PMIs miss expectations as growth momentum eases

Private business activity in the UK grew less than expected in September with growth in tailing off slightly across the board, according to a purchasing managers' index (PMI) survey out on Monday by S&P Global.

The overall composite PMI fell to 52.9 in September from 53.8 in August, S&P Global said.

Business activity grew for the 11th straight month – indicated by any reading over the 50-point neutral level – but slowdowns in both manufacturing and services meant that the overall speed of recovery eased for the first time since June.

The services PMI fell to a two-month low of 52.8 from 53.7 the month before, while the manufacturing PMI declined to a three-month low of 51.5 from 52.5.

According to S&P Global, purchasing managers who reported higher levels of output mostly commented on rising customer demand and improving domestic economic conditions, though fragile client confidence and ongoing inventory cutbacks were cited as headwinds to growth in September.

The month saw robust gains in new orders, led by strengthening order books across services, though new export orders were relatively subdued with overseas sales rising only marginally.

Meanwhile, private-sector employment growth slowed for the second straight month, with service providers showing only a small increase in staffing while manufacturers indicated renewed job cuts.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said the data hints at a "soft landing" for the uK economy. “A slight cooling of output growth across manufacturing and services in September should not be seen as too concerning, as the survey data are still consistent with the economy growing at a rate approaching 0.3% in the third quarter, which is in line with the Bank of England’s forecast," he said.

Williamson pointed out that, with services inflation cooling to the lowest since February 2021, the Bank of England is set to cut interest rates further towards the end of the year.