The UK composite index fell from 53.8 in August to 52.6 in the final September data. This indicates a slower rate of expansion in private-sector economic activity and reflects the weakest rise in both new orders and employment seen in the last three months.

The service sector index also dropped in September from 53.7 in August to a downwardly revised 52.4. Demand continued to rise but cautious decision-making among corporate clients and the impact of stretched household disposable incomes may have restrained business activity. The increase in new business volume was offset by policy uncertainty ahead of the Autumn Budget on 30th October 2024 which encouraged a wait-and-see approach to major investment decisions among clients. Employment growth slowed noticeably with rising wage costs cited as a key factor.

Output prices rose but competitive pressures made for the smallest increase since February 2021. Business activity expectations for the year ahead picked up despite many firms noting an uncertain near-term outlook for fiscal policy. This positive sentiment was due to softening inflationary pressures and stable domestic economic conditions.

The UK RPI now stands at 3 and RPI-P at minus 5, both measures showing overall economic activity within market forecasts.

No revisions are expected to the flash data.

The Services Purchasing Managers' Index (PMI) provides an estimate of service sector business activity for the preceding month by using information obtained from a representative sector survey incorporating transport and communication, financial intermediation, business services, personal services, computing and IT and hotels and restaurants. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) activity versus the previous month and the closer to 100 (zero) the faster is activity growing (contracting). The data are compiled by the Chartered Institute of Purchasing and Supply (CIPS) and S&P Global.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the ISM non-manufacturing index in the U.S. and the S&P Global PMIs elsewhere, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.

The S&P Global PMI services data give a detailed look at the services sector, how busy it is and where things are headed. The indexes are widely used by businesses, governments and economic analysts in financial institutions to help better understand business conditions and guide corporate and investment strategy. In particular, central banks in many countries use the data to help make interest rate decisions. PMI surveys are the first indicators of economic conditions published each month and are therefore available well ahead of comparable data produced by government bodies.