Uncertainty before Labour’s first budget next month is weighing on the UK economy, according to two separate business surveys.

The data company 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 were taking a “wait-and-see approach” to decision-making before the autumn budget, which is hitting investment plans, even as the chancellor, Rachel Reeves, wants to encourage business investment to boost economic growth.

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 were weighing on the immediate outlook for many businesses.

The S&P survey found the budget was “by far the most cited concern among UK private sector firms”. 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.”

A separate survey of manufacturers by the Confederation of British Industry (CBI) found that export order books in the three months to September were at their weakest since December 2020 – during the first year of the Covid-19 pandemic, and just before the UK signed the Brexit trade agreement.

Its latest industrial trends report, which the CBI described as “uniformly disappointing”, total and export order books at manufacturers deteriorated in September.

A net balance of -44% of manufacturers reported that their export order books were below normal this month – a deterioration compared with August, when the reading was -22%.

The CBI lead economist Ben Jones said: “The survey highlights that the recovery of the UK economy seen over the first half of 2024 remains fragile, with uneven progress seen across different sectors, and businesses increasingly cautious ahead of the budget at the end of next month.”

However, despite concerns of tax hikes in the budget and slowing growth, the S&P survey racked up its 11th consecutive month of improving activity across the services and manufacturing sectors, and companies said their outlook over the next year was for new orders to grow.

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.

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 is 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.