The services sector has just experienced its fourth successive period of slowdown in activity, according to the latest AIB Services PMI.

The bank’s monthly report for September 2019 says that the sector grew at its slowest pace since May 2013, with export sales falling for the second time in three months. It added that the rate of contraction of new export business was the joint-fastest since July 2009. as panellists noted a downturn in UK orders due to continued Brexit uncertainty. 

The sector dragged down the overall result for the economy, with the composite index showing at 51.0 in September, down from 51.8 in August and the slowest rise in business activity in almost seven years.

Chief economist Oliver Mangan  (pictured) commented:: "The combination of weakening global activity and the growing risk of a no-deal Brexit is now beginning to impact on the services sector. Business activity in the sector fell to 53.1 in September from 54.6 in August, its lowest level since May 2013. It was also the fourth consecutive monthly decline in the index. 

"The impact of ongoing Brexit uncertainty was quite evident. Growth in new orders eased to a six year low, with firms reporting that Brexit is affecting consumer demand. New export orders actually fell in the month, with respondents seeing a notable downturn in UK orders due to continuing Brexit uncertainty. 

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"Furthermore, business confidence fell to its lowest level in almost eight years as Brexit weighed on the outlook for activity in the sector. Meanwhile, although employment growth remained solid in September, it was still close to its slowest rate in over six years." 

The headline seasonally adjusted Business Activity Index posted 53.1 in September, down from 54.6 in August. Companies in financial services reported the fastest rise in activity and those in the transport/tourism/leisure sectors saw a return to growth after two months of contraction. 

Job creation eased for the third month running to the slowest in over six years. Manufacturing employment was unchanged from August, while service sector payroll growth quickened slightly. 

Composite input prices rose at the slowest pace since July 2016, as a softening of manufacturing purchasing cost inflation outweighed a faster rise in service sector input costs. Despite this, the rate of output charge inflation accelerated to a three-month high. 

Sentiment towards output over the coming year dropped to a series low for the second month running. Service sector optimism weakened to the lowest since December 2011, whilst manufacturers were the least confident in the 87-month series history.