The UK services sector picked up in September, however concerns remain over the uncertainty surrounding upcoming austerity cuts, according to a new study.
The Markit/CIPS UK services purchasing managers' index (PMI) for UK services rose to 52.8 for the month, up from a 16-month low of 51.3 in August, despite market expectations of a fall.
But new business inflow fell to its lowest level for the year.
It was the first time since February that the index had risen, following a progressive decline from a level of 58.4 seven months ago.
But Markit, the poling company that produces the data, warned that too much should not be read into the improvement, saying that other aspects of its survey pointed to a downturn in business.
Chris Williamson, chief economist at Markit, said: “Business activity rose at a faster rate than August, but the survey provided plenty of signs to suggest that this does not represent the start of a renewed upturn, and instead growth is set to remain subdued in the coming months.
“Of greatest concern, new business growth slowed closer to stagnation and confidence for the year ahead remained at a level only reached at times of extreme stress. Unless trends in new business show an improvement soon, the lack of confidence is consistent with a downturn in business activity in the coming months.
“Anecdotal evidence from the survey reveals that inflows of new work and prospects for the year ahead have been hit by widespread worries that the recovery is losing steam, cancelled government contracts and the prospect of more cuts to come, as well as uncertainty regarding the impact of October’s Comprehensive Spending Review.”
Latest prices data also indicated an acceleration of input cost inflation to a four-month high.
Markit said that companies reported higher supplier charges and an increase in utility bills as the primary factors driving inflation. Those companies operating in the hotels & restaurants sector also noted a marked rise in food costs, it added.
