UK PMI Services dropped to 49.5 in September, down from 50.6 and missed expectation of 50.3. All Sector PMI Output dropped to 48.8, down from 49.7, worst reading since July 2016. it’s also the first back-to-back contraction since 2012. Markit noted that new and outstanding business both declined. There was fastest rate of job shedding since August 2000, and weakest expectations for activity since July 2016.

Chris Williamson, Chief Business Economist at IHS Markit, which compiles the survey:

“A trio of grim reports on the economy means that the vast service sector has now joined manufacturing and construction in decline. Only the collapse in confidence immediately following the 2016 referendum has seen a steeper overall deterioration in the economy during the past decade, but September’s decline is all the more ominous, being the result of an insidious weakening of demand over the past year rather than a sudden shock.

“At current levels the surveys point to GDP falling by 0.1% in the third quarter which, coming on the heels of a decline in the second quarter, would mean the UK is facing a heightened risk of recession.

“Brexit-related concerns dominated the September survey responses, linked by companies to falling sales, cancelled and postponed projects, a lack of investment and job losses. “While the early summer had seen resilient jobs growth, the surveys indicate that employment is now falling at the fastest rate since December 2009.

“The increasingly dire readings push the surveys further into territory that would normally be associated with policy stimulus from the Bank of England, suggesting a greater likelihood that the next move in interest rates will be a cut.”

Full release here.

UK PMI Construction dropped to 43.3 in September, down from 45.0 and missed expectation of 45.0. That’s the second worst reading since April 2009. Markit noted that commercial activity remained the weakest-performing category. There was the second quickest fall in new orders for over a decade. And employment cut to greatest extent since December 2010.

Joe Hayes, Economist at IHS Markit, which compiles the survey:

“The UK construction sector remained mired in a downturn at the end of the third quarter, according to the latest PMI data. Activity is being pulled down at its second-fastest clip for over a decade as firms are buffeted by client hesitancy, heightened Brexit uncertainty and a weak outlook for the UK economy. The commercial sector was a notable casualty in September, with building activity here falling at the fastest rate since April 2009, highlighting the damaging effects of project delays and belt-tightening.

“Low confidence has subsequently caused construction order books to fall substantially. Panellists reported another sharp drop in demand in September that was one of the strongest in the post-crisis era. Forwardlooking indicators suggest that businesses are bracing themselves for a protracted construction slump, with input purchasing and employment both falling at rates unsurpassed since 2010.

“Overall, the performance of the UK economy once again hinges on the service sector showing a marked degree of resilience to offset the weakness seen in construction and manufacturing.”

Full release here.

UK BRC Shop Price Index dropped -0.6% yoy in August. BRC Chief Executive Helen Dickinson OBE said: “While consumers may welcome lower prices, falling consumer demand is squeezing retailers’ already tight margins. With business costs continuing to rise – including business rates, wage bills, and pension costs – the high street risks more big name closures. Reform of business rates remains the most effective way Government can support the retail industry – and they should grasp the opportunity with both hands.”

Mike Watkins, Head of Retailer and Business Insight, Nielsen: “With consumers feeling uncertain about spending, retailers continue to focus on limiting price increases coming through the supply chain. Prices have fallen in non foods helped by seasonal reductions and many food retailers have introduced price cuts to help regain momentum after a challenging summer. Competition for discretionary spend will intensify across all channels as we head towards the end of the year and we anticipate more promotional savings for shoppers and inspiring media campaigns that help to drive incremental sales.”

Full release here.