The data firm S&P Global said UK private sector activity growth slowed for the second consecutive month in September, affecting companies in the services and manufacturing industries.

Some companies reported that clients are taking a “wait-and-see approach” to decision-making before the autumn budget, which is hitting investment plans.

The figures suggest Labour’s emphasis on its poor inheritance from the previous Conservative administration and the need for a tough budget on 30 October was weighing on the immediate outlook for many businesses.

rest of the parliament, is expected to include tax rises to fill a £22bn hole in the public finances identified by the chancellor, Rachel Reeves .

Reeves has said she wants to encourage business investment to increase economic growth, which is forecast by the Bank of England to remain low next year, rising by only slightly above 1%.

The S&P survey found the budget was “by far the most cited concern among UK private sector firms”. However, the survey racked up its 11 consecutive month of growth in activity, and companies said their outlook over the next year was for new orders to grow.

Export orders remained “relatively subdued” and total overseas sales rose only “marginally” in September”.

The survey said: “Some service providers noted higher demand from US clients, but manufacturers frequently suggested that weak EU sales had weighed on export orders.”

Overall, the Flash UK PMI Composite Output Index dipped to 52.9, down from August’s 53.8. A figure above 50 indicates growth. Inflation is expected to moderate after companies slowed their price rises this month. The average prices charged by private sector businesses rose at the slowest rate since February 2021.

Rob Wood, the chief UK economist at the consultancy Pantheon Macroeconomics, said weaker prices growth would cheer the Bank of England, which has been waiting for signs of lower increases in prices before making further cuts in interest rates.

Chris Williamson, the chief business economist at S&P Global Market Intelligence, said: “A slight cooling of output growth across manufacturing and services in September should not be seen as too concerning, as the survey data are still consistent with the economy growing at a rate approaching 0.3% in the third quarter, which is in line with the Bank of England’s forecast.

“Business optimism has also risen, albeit with concerns about the impact of the [budget] jangling nerves somewhat, notably in the manufacturing sector. Investment plans in particular are reported to have been put on ice pending clarity on the new government’s policies, especially towards taxation.”

The UK economy has outperformed the eurozone this month, helping the pound hit a two-year high against the euro. Sterling gained half a eurocent to €1.1967, its highest level since early August 2022.

A downturn in Germany – where business activity fell at the quickest rate for seven months in September – has pulled the wider eurozone economy into a contraction. Business activity across the euro area has decreased so far in September, with the HCOB Flash Eurozone PMI index dropping to 48.9, an eight-month low, and below the 50-point mark showing stagnation.

Hamburg Commercial Bank predicts Germany’s economy will shrink by 0.2% in the July-September quarter. That would put the country into recession, as GDP fell by 0.1% in April-June.