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UK services unexpectedly shrink in September

UK services unexpectedly shrink in September

U.K. services PMI showed an unexpected contraction in September, raising concerns the British economy may on the brink of economic recession.

Services sector growth plunged to a six-month low of 49.5 last month from 50.6 a month earlier, compared to analysts’ projection of 50.3.

The composite index, which encompasses the three major services, manufacturing and construction sectors, slipped to 48.8 from 49.7. That was the first back-to-back shrinkage since the last two months of 2012. 

The fall was a byproduct of “insidious weakening of demand over the past year rather than a sudden shock,” said Chris Williamson, chief business economist at IHS Markit.

“At current levels the surveys point to GDP falling by 0.1% in the third quarter which, coming on the heels of a decline in the second quarter, would mean the UK is facing a heightened risk of recession,” Williamson added.

As of 0:57 GMT, the pound snapped its earlier losses to trade slightly higher at $1.2311 after hitting a low at $1.2265.

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