UK services sector stalls as consumer spending tightens: Stocks to eye

Amid the skyrocketing inflation levels hitting the budgets and discretionary spending of UK households, the services sector activity in the UK stalled in September. As per S&P Global, the sector's performance hasn't been this weak since February 2021, when the national lockdown was imposed, and pessimism about the economic outlook was on the rise.

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The S&P Global’s UK services purchasing managers index (PMI) stood at 50.0 during the month of September, falling from 50.9 in August. This shows that the sector flatlined in September, with the readings indicating that there has been neither any expansion nor any contraction.

S&P said that service providers often observed spending cuts amongst UK households, particularly related to discretionary services like leisure and hospitality. Reportedly, the demand issues were further worsened due to the soaring business costs and intensified economic uncertainty. Even with demand weakening in September, service providers forwarded the higher costs to the consumers.

The latest survey also indicated that overall, there has been a marginal fall in fresh orders across the service economy. This is in contrast with the time span of growth observed over the past year and a half. While the service sector growth stalled, UK investors can keep an eye on the below service providers listed on the London Stock Exchange.

RPS Group plc (LON: RPS)

RPS Group plc is one of the top professional services businesses operating across the globe. The group’s P/E ratio stands at 76.90, and it has a turnover (on book) of £28,690.08 at present. On a YTD (year-to-date) basis, the present return of the company stands at a whopping 92.25%, while its 12-month return is at 98.33%. Its EPS (earning per share) lies in the positive territory, at 0.02. RPS shares were trading at GBX 238.00 at 9:37 AM (GMT+1) on Thursday. At the time of writing, the company’s market capitalisation stood at £669.05 million.

Mediclinic International plc (LON: MDC)

Mediclinic International plc is a globally leading healthcare services provider. The group’s P/E ratio stands at 24.11, and it has a turnover (on book) of £707,067.02 at present. On a YTD basis, the return of the FTSE250-listed company as of 6 October is 54.09%, while the annual return stands at 59.77%. Its EPS lies in the positive territory, at 0.09. MDC shares were trading at GBX 493.80 at 9:40 AM (GMT+1) on Thursday. At the time of writing, the company’s capitalisation stood at £3,687.75 million.

Airtel Africa plc (LON: AAF)

Airtel Africa plc is an international wireless telecommunication services provider headquartered in the UK. The group’s P/E ratio stands at 8.50, and it has a turnover (on book) of £202,916.25 at present. On a YTD basis, the return of the FTSE100-listed company as of 6 October stands at 0.22%, while its 12-month return stands at 39.29%. Its EPS lies in the positive territory, at 0.17. AAF shares were trading at GBX 133.80, surging by 0.30%, at around 9:45 AM (GMT+1) on Thursday. At the time of writing, the company’s capitalisation stood at £5,013.37 million.

Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.