The closely watched composite PMI for the UK eased to 51.7 in September, down from 52.5 a month earlier and a touch below the 52 median forecast. That keeps the gauge above the 50 line that marks growth, but it is the weakest reading in three months. S&P Global said the combined rise in services and factory output lines up with quarterly growth of roughly 0.1%.
Momentum that looked surprisingly strong over the summer appears to be fading after renewed stress hit energy and bond markets while the US-Iran war grinds on. Nerves are building ahead of Prime Minister Andy Burnham's inaugural budget, as pricier debt service narrows the government's thin fiscal space and heightens the odds of tax hikes. Within the survey, the services index softened to a three-month low, and a measure of manufacturing output fell to a six-month low. Survey participants cited sluggish consumer appetite and a muted home market, though AI-related investment and stronger defense outlays provided some counterweight.
Signs are growing that the energy shock is filtering through to UK businesses. Rising fuel bills drove input costs to increase more rapidly than at any time in the past three months, and companies lifted selling prices at their swiftest rate since June. He added, "September is seeing a worrying combination of disappointingly sluggish economic growth and intensifying inflationary pressures."
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The summer upswing got a lift from the World Cup, sunny weather and companies tied to AI, but that tailwind is weakening. Still, sentiment is holding up: S&P's gauge of expectations for future output stayed at its strongest since February. For everyday investors, that mix of slower growth and firmer prices hints at a stickier inflation backdrop even as activity cools. One more note for context seekers: Bloomberg ran a 4:44 segment breaking down the PMI and the market takeaways.
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