UK service sector growth lost momentum in September, with the services PMI slipping to 50.8 from August's 16-month high of 54.2, while the composite PMI dropped to 50.1 from 53.5. The reading remained above the 50.0 threshold, signalling modest expansion, but it marked the weakest performance in five months as demand faltered, and clients hesitated over new commitments amid political and economic uncertainty.

New business rose only slightly, dampened by delayed spending ahead of the Autumn Budget and weaker export sales after a brief rebound in August. Backlogs of work continued to decline, easing capacity pressures but reinforcing cautious hiring. Employment fell at a faster pace, extending a year-long run of job losses as firms reduced headcounts to offset rising payroll costs. Input inflation remained sharp, driven by higher wages, energy, and food prices, although it moderated to its second-lowest rate of 2025.

Competitive pressures limited firms' ability to pass on higher costs, with output charges rising at their slowest pace since June. Optimism persisted, with nearly half of firms forecasting growth over the year ahead, though confidence was notably weaker than pre-pandemic norms. Overall, September's updates show a fragile service sector squeezed by rising costs, soft demand, and uncertainty, even as long-term investment plans provide pockets of resilience. This leaves the RPI at minus 4 and the RPI-P at minus 5, showing that economic activities remain within the expectations of the UK economy.

The composite is expected unrevised from the flash at 51.0 and services is seen unrevised at 51.9.

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.