UK Preliminary Services PMI contracts to 49.2 in September vs. 50.0 expected

• UK Manufacturing PMI rises to 48.5 in September, beats estimates.
• Services PMI in the UK drops to 49.2 in September, a big miss.
• GBP/USD tests multi-decade lows near 1.1150 on dismal UK PMIs.

The seasonally adjusted S&P Global/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) unexpectedly improves to 48.5 in September versus 47.5 expected and 47.3 – August’s final reading.

Meanwhile, the Preliminary UK Services Business Activity Index for September arrived at 49.2 when compared to August’s final score of 50.9 and 50.0 expected.

The first reading of the S&P Global/CIPS Composite PMI came in at 48.4 in September vs. 49.0 expected and 49.6 previous.

Chris Williamson, Chief Business Economist at S&P Global, commented on the survey

“UK economic woes deepened in September as falling business activity indicates that the economy is likely in recession.“

“Companies report that the rising cost of living, linked to the energy crisis, and growing concerns about the outlook are subduing demand and hitting output levels to an extent not seen since 2009, barring the pandemic lockdowns and initial 2016 Brexit referendum shock.”

FX implications

A slump in the UK Services PMI adds to the downside in the GBP/USD pair. The spot is trading at 1.1163, shedding 0.83% on the day.