Investing.com - The U.K. service sector unexpectedly fell into contraction territory in September, according to a closely watched business survey released on Thursday.
Research firm IHS Markit said its services purchasing managers' index slipped to 49.5 in September, compared to forecasts for a reading of 50.3, below August's reading of 50.6. A reading below 50 indicates contraction.
Completing a hat-trick of poor PMI readings for the month of September, the services data indicates that the British economy may have slipped into recession. The service sector makes up more than 70% of the U.K.'s GDP.
UK composite PMI dipped to 48.8 from 49.7 in August, the lowest reading since 2016. The manufacturing and construction PMIs released earlier in the week fell deeper into contraction than the services sector.
Economic uncertainty surrounding Brexit may have contributed to the slump with U.K. firms preparing to leave the European Union in four weeks time. The U.K.'s new prime minister Boris Johnson has promised a 'do or die' Brexit, meaning he is prepared to leave the EU with or without a deal on Oct. 31.
The pound's reaction to the weak data was muted. At 09:20 GMT GBP/USD was up 0.1% to 1.2315, while EUR/GBP was flat at 0.8903.
The FTSE 100 was down 0.6% as the WTO's approval U.S. trade tariffs on a list of European goods rocked markets. The London index saw its worst session for more than three years on Wednesday.