Britain’s services companies faced their sharpest rise in operating costs in months during September, as fuel prices climbed sharply on the back of the ongoing Middle East conflict. The latest S&P Global survey, published on Monday, found that the increase in prices charged to customers reached its highest level since May, reigniting concern about stubborn inflation across the economy.
Growth cools while costs climb
The headline services Purchasing Managers’ Index slipped to 52.1 in September from 52.5 in August, marking its joint-weakest reading since June. A figure above 50 still signals expansion, but the direction of travel is clear: growth is losing momentum while costs accelerate.
Tim Moore, economics director at S&P Global Market Intelligence, pointed to surging fuel prices linked to the Middle East conflict as the main driver of input cost inflation. More than a third of firms surveyed reported higher average cost burdens, and the prices they passed on to clients rose at the fastest pace in four months.
Jobs market hits a record low streak
The survey also revealed a darker trend in employment. Services firms cut jobs for the 24th consecutive month, the longest period of sustained decline since records began in 1997. Business confidence for the year ahead also softened, slipping from August’s seven-month high as companies cited weak demand and persistent cost pressure.
Services dominate the British economy, accounting for roughly four-fifths of national output, so the sector’s cost pressures tend to ripple through the wider economy. Rising fuel and wage costs for transport, hospitality and logistics firms often end up in the prices paid by households, keeping inflation sticky even when consumer demand looks soft.
The composite PMI, which combines services and manufacturing, eased to 52.0 from 52.5, its lowest since June but still within growth territory. The data is likely to keep the Bank of England cautious, as policymakers weigh the risk of a fresh pick-up in inflation against an economy that continues to slow.
Source: Reuters