UK services sector records biggest fall in 12 years

03 10 2008 United Kingdom

Activity in the UK’s services sector dropped sharply in September, marking a record fall since 1996 when the Chartered Institute for Purchasing and Supply (CIPS) index was first published

The CIPS survey for the UK’s services sector fell to 46 due to a drop in new orders and employment. In August the index stood at 49.2, just below the ‘breakeven’ point of 50.

Hotels and restaurants recorded the biggest fall, followed by transport, storage and communications.

70 per cent of the UK’s Gross Domestic Product depends on the services sector, which has been in decline since May.

One glimmer of good news was that inflation in input costs eased to its lowest since January, thanks to lower prices of oil.

Paul Smith, senior economist at Markit Economics, said: "Following on from the shocking manufacturing figures and a further considerable reduction in construction sector output for September, the services data provide more evidence of rapidly deteriorating activity in the real economy."

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