Chris Williamson, chief economist at S&P Global Market Intelligence, noted that while business optimism had risen, uncertainty about the budget was "jangling nerves," particularly in the manufacturing sector. "Investment plans have been put on hold, and hiring has slowed as businesses await clarity on government policies, especially taxation," he said.
The PMI, compiled by S&P Global from a survey of 1,300 firms, highlighted that businesses are increasingly adopting a "wait and see" approach in the lead-up to Chancellor Rachel Reeves' budget announcement on October 30. Some companies have paused investment and recruitment decisions until fiscal policies are clarified.
While costs faced by businesses rose in September, breaking a 45-month low recorded in August, the rate at which companies raised prices was the slowest since February 2021, hinting that inflationary pressures may be under control.
Despite the slowdown, Alex Kerr from Capital Economics said the data suggested a "soft landing" for the UK economy and that inflation pressures appeared to be easing without triggering a downturn.
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