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UK service jobs slashed at fastest pace since 2009 in September as output drops



The service sector, which employs the vast majority of UK workers, made the biggest reduction in its workforce in over nine years in September as output shrank for the first time since March, a survey has revealed.

The closely watched release showed that employment in services, which account for over 83 per cent of UK jobs, fell at the fastest pace since December 2009. 

The PMI measure of the sector’s output, based on the survey, unexpectedly fell to 49.5 from 50.6 in August, below the 50 mark that indicates no change compared with the previous month. This is the first below-50 reading since March when Britain was last facing a no-deal crash-out from the EU.

Analysts said this headline measure may be too downbeat, partly because the services PMI does not include the retail and public sectors where activity has held up well recently. 

Nonetheless, the latest survey, together with polls on UK manufacturing and construction released earlier, is “probably giving us a reasonable steer on the underlying strength of economic activity”, said Ruth Gregory, senior UK economist at Capital Economics. 

Although she still thinks GDP grew slightly in the July-September quarter, the risks to that forecast “appear to be firmly to the downside”, Ms Gregory added.

The September PMIs for the much smaller manufacturing and construction sectors came in at 48.3 and 43.3 respectively, signalling a deeper contraction than in services. 

Summing up the results of the three PMIs, Chris Williamson, chief business economist at IHS​ Markit, which compiles the surveys, said: “Brexit-related concerns dominated the September survey responses, linked by companies to falling sales, cancelled and postponed projects, a lack of investment and job losses.”

Employment in manufacturing and construction also fell over the month. The reduction in construction was the steepest since December 2010.

The labour market has been resilient this year, with the employment rate hovering around a record high. However, a number of economists, including at the Bank of England, have suggested that companies have preferred to hire rather than to invest because of the persistent uncertainty over Brexit. The argument goes that firms can let workers go if their sales drop, whereas investment in machinery is a more permanent expense.



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