By Jonathan Davies

The UK economic recovery is slowing down, according to a closely watched survey.

The Markit Services Purchasing Managers' Index (PMI) dropped to a three-month low of 58.7 in September, down from 60.5 in August.

Any figures above 50 indicates growth, so the UK's services industry, which accounts for around 70% of the country's GDP, is still growing at a very fast pace. But Chris Williamson, chief economist at Markit, said the recovery "could slow faster than expected".

"The recovery appears to be losing its legs," he said.

Despite the negative outlook, the PMI did contain very positive news. Volumes of news business grew, as did backlogs of work. The index also showed that business confidence is on the up, with expectations at a three month high which led to more companies increasing their workforce.

Chris Williamson said: "September's PMI surveys suggest that the UK most likely enjoyed another spell of above-trend economic growth in the third quarter, but the recovery appears to be losing its legs.

"The worry is that the economy could slow faster than anticipated. Manufacturing growth slowed to a crawl in September and business optimism has fallen to the lowest for almost a year in the construction sector. If there is a knock-on effect to the vast services sector, the economy will lose its main source of growth."

The pound sterling reacted badly to the index, falling to an 11-month low against the US dollar. The pound is now worth $1.6080.

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