UK services activity lost some momentum in September, with PMI Services easing from 52.5 to 52.1, though the final reading was revised up from the 51.7 flash estimate. Output expanded for a third consecutive month, but new business increased only marginally and at the slowest pace since the current growth sequence began in July. Export orders fell for a seventh straight month, with firms citing strong competition and weak global demand.
The broader demand and labour picture remained soft. Services employment declined for the 24th consecutive month, although the latest fall was the slowest since October 2025. Firms continued to cite high payroll costs and greater use of technologies including AI, while backlogs fell for a seventh month as capacity remained sufficient for existing workloads. PMI Composite also slipped from 52.5 to 52.0, a three-month low, as both manufacturing and services growth moderated.
The more notable signal came from inflation pressures, which strengthened despite softer growth. Services input-cost inflation accelerated for a second month to the fastest pace since June, driven by higher fuel, oil and gas costs, shipping disruption and elevated payroll expenses. Output-price inflation also rose to the strongest since May. S&P Global said the increase marked a clear reversal of the slowdown seen in mid-2026, leaving the UK with a less comfortable mix of moderate activity growth, weak hiring and firmer price pressures.
Data Summary
| Indicator | Sep | Aug |
|---|---|---|
| PMI Services | 52.1 | 52.5 |
| PMI Composite | 52.0 | 52.5 |
Key Takeaways
- Services growth slowed modestly: PMI Services eased from 52.5 to 52.1, but the final reading was stronger than the 51.7 flash estimate.
- Demand remained soft: new business increased only marginally and at the slowest pace since the current growth sequence began in July.
- Export weakness persisted: new business from abroad fell for a seventh consecutive month.
- Employment stayed under pressure: services firms cut jobs for a 24th straight month, although the latest decline was the slowest since October 2025.
- Capacity was not tight: backlogs fell for a seventh month, suggesting firms generally had enough capacity for existing workloads.
- Inflation re-accelerated: services input-cost inflation rose to the fastest pace since June, while output-price inflation reached its strongest pace since May.
- Energy was the main driver: firms cited higher fuel, oil and gas prices, shipping disruption and elevated payroll costs.
- The broader private sector also slowed: PMI Composite fell from 52.5 to 52.0, while both input-cost and output-price inflation reached their highest since June.
