UK services sector growth 'losing its legs', PMI data shows

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Growth in the UK services sector slowed to a three-month low in September amid suggestions that the recovery may be "losing its legs".

The closely-watched purchasing managers' index (PMI) from Markit/CIPS fell to 58.7 from 60.5 in August.

A figure above 50 still indicates expansion, but Markit chief economist Chris Williamson said the slowdown eased pressure to raise interest rates.

He said it "adds to the case for rates to remain on hold until next year".

Also, a composite PMI survey for the whole of the private sector dropped from 59.7 to 58.1, its lowest level in six months.

Mr Williamson said the data pointed to official figures showing that gross domestic product growth in the three months to September would be 0.8%, slightly lower than the 0.9% reached in the second quarter.

He said: "September's PMI surveys suggest that the UK most likely enjoyed another spell of above-trend economic growth in the third quarter, but the recovery appears to be losing its legs.

"The slowdown is in line with Bank of England projections and, alongside record low pay growth, adds to the case for interest rates to remain on hold until next year, and at least until there are clear signs of wages and household incomes rising in real terms."

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