UK services sector activity beats expectations in September

Growth in the UK’s closely-watched service sector picked up in September from a 16-month low.

The latest index from the Chartered Institute of Purchasing and Supply (CIPS)/Markit PMI climbed to 52.8 in September, from 51.3 the previous month, beating expectations of a reading of 51.

However, the index remains above the crucial 50 level, which indicates expansion.

Worryingly, though, companies in the sector reported that inflows of new business grew at a slower rate and activity is expected to dip further as planned cuts to Government departments will hit the sector.

The service sector accounts for 70% of the UK economy.

The figures come shortly after CIPS/Markit PMI showed construction activity improved last month, driven by the commercial sector and civil engineering.

The index edged higher to 53.8 in September, from 52.1 in August – surprising analysts, who had expected a fall to 51.4.

Meanwhile, last week, the CIPS/Markit PMI revealed UK manufacturing activity continued to slow in September.

The closely-watched manufacturing PMI slid to a 10-month low of 53.4 in September, down from a revised 53.7 in August.

The reading represented the lowest since November 2009 and fell short of expectations of a level of 53.8.

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