Flagging service sector growth highlighted

The rate of United Kingdom 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.

On the global front, market research group Markit will unveil its Markit/CIPS Services Purchasing Managers Index data for September 2015 on Monday, October 5, 2015.

A reading above 50 indicates expansion, while a reading below that represents contraction.

Total new work was unchanged for the second month running, however, while new work from overseas rose only slightly. Reduced production schedules also prompted firms to lower their purchasing activity again in September, while disappointing sales led to the strongest increase in stocks of finished goods for over three years.

Philip O’Sullivan, chief economist, Investec, said, “With more than four times as many firms reporting an expansion of new business against those that posted a contraction in September, it is clear that a broad improvement in activity is continuing”. Companies lowered their selling prices amid attempts to boost customer interest.

The composite PMI reading for the month was also downbeat: it was 51.2, the lowest since April, compared to 52.9 in August which was the highest in 19 months. The latter covers only the manufacturing sector. Average service sector charges in the euro area rose marginally in September, ending an unbroken sequence of decline that started in late-2011.

Figures on the services sector are so closely watched because the sector contributes around 70% of the UK’s GDP.

Noble attributes the shock drop in the services PMI to a slowdown in China this year.

The Caixin China Report on General Manufacturing is based on about 90 percent of responses to surveys sent to more than 420 manufacturers.

Slower growth of manufacturing and services has left construction as the fastest-growing part of the economy, although even here inflows of new business grew at the second-slowest rate since mid-2013.