The figures will add to concerns over the economy’s growth which were fed by a slew of negative data last week.
Lloyds Bank’s purchasing managers’ index fell to a score of 55.7 in August – a 27-month low – according to figures published today.
Despite the dip, it remains above 50, which means business activity is still expanding. Only the south east and east Midlands avoided a slowdown, with firms in every other region of the UK reporting less rapid growth.
A business optimism index compiled by accountancy firm BDO dropped to a score of 101.9 from 103.3 last month, nearer to its long-term average. For manufacturers, confidence was at its lowest level since November 2012.
Fears that a slowdown in China could impact world trade and British exporters was one reason for the decline in sentiment, BDO said.
Manufacturers and the construction firms saw a contraction in output in July, official figures revealed last week. Exports also declined.
In order for the economy to expand as quickly as it did in the three months to June, when it grew 0.7 per cent, the service sector, which makes up roughly 80 per cent of the economy, will have to do most of the heavy lifting.
The Confederation of British Industry’s survey of 754 firms across manufacturing, retail and services came back , with especially among the service sector.
Martin Beck at Oxford Economics predicts the economy will see another three months of 0.7 per cent growth from July to September due to the strength of the service sector. But he said: “The goal of a better-balanced economy looks an ever-more distant prospect.”