MNI DATA ANALYSIS: UK Services Sector Remains Robust In Sep

--IHS Markit/CIPS UK Services PMI 53.9 in September vs 54.3 in August

By Jai Lakhani

     LONDON (MNI) - UK services sector activity slowed moderately in September

but remained robust, sitting above the 2018 average level, the IHS Markit/CIPS

survey released Wednesday showed.

     The IHS Markit/CIPS UK Services Purchasing Managers' Index (PMI) fell 0.4

points to 53.9 in September from 54.3 in August, slightly below the MNI median

of 54.0. The rise marked the 26th successive month the headline index is above

the 50-mark, the line delineating between expansion and contraction. 

     --MIXED FORCES

     The headline index was again underpinned by strong growth in both business

activity and incoming new work, albeit at a slower rate than in August.

Improving business conditions also underpinned employment growth, which

outperformed August, rising at the fastest pace in six months. 

     According to the IHS Markit/CIPS report, some survey respondents continued

to note Brexit concerns among clients, along with heightened economic

uncertainty as the key factors constraining growth. 

     In August, business confidence for the year ahead dropped to its lowest

level since March due to Brexit-related uncertainty. This uncertainty continued

to be a factor and resulted in tighter budget setting among clients despite

resilient demand. 

     --HIRING INTENTIONS UP

     Job creation was the fastest since February, reflecting the need to meet

the increased demand. However, the continued tight labour market meant there was

difficulty filling vacancies, often pushing up starting salaries. 

     This also meant that backlogs of work increased for the fifth month in a

row as staff shortages led to stretched capacity. The backlogs were also helped

by a solid rise in new work. 

     --INPUT COST PRESSURES

     As a result of ongoing hiring difficulties, salary payments rose in

September. This, combined with rising fuel prices, resulted in a sharp increase

in cost burdens across the sector. However, cost-pass through was limited due to

intense competitive pressures. This resulted in the prices charged by service

providers increasing at the slowest rate in just over one year. 

     --STEADY AS SHE GOES FOR Q3 GROWTH

     "The service sector continued to report solid steady business growth in

September which, alongside news of sustained expansions in both manufacturing

and construction, suggests the UK economy expanded by just under 0.4% in the

third quarter. The data therefore add to signs that the economy has enjoyed

robust growth since the rocky start to the year, when extreme weather disrupted

business," said Chris Williamson, Chief Business Economist at IHS Markit. 

--MNI London Bureau; +44 203 865 3828; email: jai.lakhani@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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