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Britain's manufacturing and service sectors have dampened overall business growth this month, as uncertainty builds ahead of the upcoming Budget. Flash purchasing managers' index (PMI) figures from S&P Global revealed a reading of 52.9 for September, a decline from August's 53.8. This marks an 11-month streak of improving private sector activity, albeit at a slower pace than previously observed.
S&P Global reported that "fragile client confidence and ongoing inventory cutbacks" have impacted both the service and manufacturing sectors. Industry participants have also expressed caution in light of October's Autumn Budget, which is contributing to a more reserved outlook.
Economist Chris Williamson emphasized that the PMI figures remain "encouraging," with a reading above 50 still indicating growth in the economy. He noted that a slight cooling in output growth across manufacturing and services in September should not be viewed as overly concerning. The survey data suggests that the economy is still on track to grow at a rate approaching 0.3% in the third quarter.
Furthermore, business confidence showed signs of improvement over the month. Williamson pointed out that the ongoing cooling of service inflation may lead to further interest rate cuts by the Bank of England later this year. This potential easing could provide additional support for economic activity as firms navigate a landscape of rising costs and fluctuating demand.
The combined effects of cautious consumer sentiment and inventory management strategies reflect broader trends in the economy, as businesses adapt to changing market conditions. While the growth rate has moderated, the underlying resilience in the private sector remains evident.
Overall, the latest PMI figures highlight the challenges faced by Britain's economy, but they also suggest a level of stability. As firms brace for potential fiscal changes and shifts in policy direction, the path ahead will require careful navigation to maintain momentum. The ongoing assessments of economic indicators and business sentiment will be critical in shaping the responses from policymakers and industry leaders alike.
