Brexit uncertainty weighs heavily on UK services firms growth in September, new survey finds

The overall PMI came in at 53.9 in the month, slowing from the 54.3 reading in August

Brexit uncertainty continued to weigh heavily on services firms in September, according to the latest Purchasing Managers’ Index survey.

It found “widespread reports” from companies that political uncertainty and global trade tensions had diminished their overall growth projections.

“Brexit worries continue to dominate the outlook, keeping business optimism firmly anchored at levels which would normally be indicative of an imminent slowdown,” said Chris Williamson of IHS Markit, which compiles the survey.

“Clarity on Brexit arrangements is therefore needed as soon as possible to help sustain growth.”

The overall PMI index came in at 53.9 in the month, slowing from a 54.3 reading in August. Any figure over 50 indicates expansion.

The PMIs for manufacturing and construction in September, released earlier this week, were disappointing and both indicated Brexit-related pressures.

Analysts said that the latest PMIs overall were consistent with GDP growth of 0.3 to 0.4 per cent in the third quarter of 2018.

That would be slightly below the 0.4 per cent rate of growth recorded in the second quarter by the Office for National Statistics.

Services account for about 80 per cent of UK GDP. The ONS estimates that growth picked up to 0.6 per cent in Q2, from 0.3 per cent in Q1.

The services PMI covers restaurants, hotels, transport, computing and business services, but not retail.

“The subdued level of the PMIs places little pressure on the [Bank of England] to raise interest rates again before the March 2019 Brexit deadline,” said Samuel Tombs of Pantheon.

“The economy remains a long way from overheating and growth is likely slow further if Brexit talks aren’t amicably concluded soon, given that firms are reporting to Markit that political uncertainty is weighing on budget setting and confidence.”