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INSTANT VIEW 3-UK services PMI falls more than forecast

LONDON, Oct 3 (Reuters) - Britain's service sector growth slowed in September and services providers shed jobs for the first time in 10 months, a survey showed on Wednesday, casting more doubt on the chances of a sustained recovery.

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SEPT AUG FORECAST Services PMI headline index 52.2 53.7 53.0 Business expectations index 67.0 66.5 N/F Composite PMI output index 51.1 52.2 - Employment index shows first job losses since Nov 2011 - Input prices rise at nearly unchanged rate - New business increases at slightly faster pace - Prices charged largely unchanged

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ECONOMISTS' COMMENTS: JENS LARSEN, RBC

"The truth is it is not a big change. If you were one of those looking for green shoots, then this told you that Q3 remained pretty miserable. I see underlying growth of about 0.2 percent on the basis of this, which is not very much. The only reason we will have a strong Q3 is because of special factors."

"The most concerning bit of it is the sharp fall in the employment index."

GEORGE BUCKLEY, DEUTSCHE BANK

"The data is weaker than expected, but it's consistent with very low GDP growth of roughly 0.1 per cent. Obviously you can have growth that deviates from the broader message, but what this seems to suggest is that on an underlying basis, growth is exceptionally weak.

"I think it will be a an important decision for the Bank, but this does increase the possiblity of action in time."

CHRIS WILLIAMSON, CHIEF ECONOMIST AT SURVEY COMPILERS MARKIT:

"The September service sector PMI adds to evidence to suggest that the UK economy barely expanded in the third quarter. GDP is likely to have grown by perhaps 0.1 percent as modest growth of services activity was offset by a slight drop in construction sector output and a steeper decline in manufacturing, according to the PMIs.

"Official data are likely to show a stronger GDP rebound, reflecting a technical bounce-back from second quarter weakness arising from extra Jubilee holidays, but the PMI provides an insight into the underlying trend of the economy, and - like the BCC survey - warns of near stagnation.

"Employment has also suffered in response to the slowdown, with September seeing one of the steepest cuts to service sector staffing since 2009. With the mini-boom in the labour market having now come to an end, it seems inevitable that unemployment will start to rise again.

"Hopes are therefore pinned on the recent upturn in new orders being sufficiently strong and sustained to bring about improved growth of business activity and renewed hiring in coming months. New orders across all sectors grew at the fastest rate since May, though it is too early to say if this simply reflects a revival after an Olympics-related lull, as indicated by many companies."

(Reporting by Sven Egenter)

((sven-markus.egenter@thomsonreuters.com; +44 (20) 7542 7708; Reuters Messaging: sven-markus.egenter.thomsonreuters.com@reuters.net))

Keywords: PMI SERVICES/BRITAIN