UK services PMI drops on world economy concern

Britain’s recovery is losing steam as worries about the world economy grow, consumers curb spending, and manufacturing sector weakness spreads, said the authors of a closely watched business survey yesterday.

The Markit/CIPS all-sector purchasing managers’ index (PMI) for Britain fell to 53.9 in September, its lowest in two and a half years, led by a slowdown in the services sector that was sharper than any economist had expected in a Reuters poll.

Markit said its surveys pointed to quarterly economic growth dropping from an above-average 0.7% in the three months to June to 0.5% in the three months to September.

“Weakness is spreading from the struggling manufacturing sector, hitting transport and other industrial-related services in particular,” said Chris Williamson, chief economist at Markit.

“There are also signs that consumers have become more cautious and are pulling back on their leisure spending.”

The headline services PMI dropped to 53.3 in September from August’s 55.6, its lowest since April 2013 and well below any forecast in a Reuters poll of economists.

The all-sector PMI, which factors in last week’s manufacturing and construction PMIs, also sank to its lowest since April 2013 at 53.9, down from 55.4.