LONDON, Sept 22 Reuters British companies endured a much tougher September than feared, marked by growing unemployment and recession risks, according to a survey on Friday that underlined why the Bank of England halted its run of interest rate hikes this week.

A preliminary flash reading of the UK SP Global Purchasing Managers39; Index PMI for the services sector dropped to 47.2 from 49.5 in August, sinking further below the 50 dividing line between growth and contraction.

The survey is closely watched by the BoE and Treasury as a highfrequency gauge of activity in the economy.

It was the lowest PMI score since the pandemic lockdown of January 2021 and below all forecasts in a Reuters poll of economists that had pointed to a reading of 49.2.

Aside from the COVID19 pandemic, the index last fell this low during the Global Financial Crisis, while its gauge of employment suffered its biggest fall on record outside of the pandemic.

BoE ratesetters had access to the survey ahead of their decision to leave interest rates on hold this week at 5.25.

Data company SP Global said the figures were consistent with a drop in quarterly economic output of around 0.4.

The disappointing PMI survey results for September mean a recession is looking increasingly likely in the UK, said Chris Williamson, chief business economist at SP Global.

The survey showed a further decline in inflation pressure from companies, despite widespread reports of strong wage growth.

A major concern in…