Britain's services sector contracted last month at its fastest rate since records began 12 years ago as new business crumbled, confidence fell and the pace of job-shedding increased.
Combined with dismal manufacturing and construction data earlier this week, the figures suggest Britain's economy is dangerously close to a recession, if not already in one.
Nevertheless, market reaction was muted, with investors already convinced that the Bank of England will cut interest rates next week.
The Chartered Institute of Purchasing and Supply/Markit purchasing managers' index for services companies fell to 46 last month from 49.2 in August. Not one analyst polled by Reuters had forecast such a big decline. The consensus forecast was for a reading of 48.
"Following on from the shocking manufacturing figures and a further considerable reduction in construction sector output for last month, the services data provide more evidence of rapidly deteriorating activity in the real economy," said Paul Smith, senior economist at Markit Economics.
He noted a composite index, comprising services, manufacturing and construction, had fallen to its lowest level on record, consistent with an economy "close to, if not in recession".
The services sector, which spans banking to cafes, makes up around three-quarters of Britain's economy and has been below the 50 mark that divides growth from contraction since May.
"The sharp weakening in last month's report on services adds to other evidence suggesting the economy is already in recession and tips the balance towards a rate cut next week," said Paul Dales at Capital Economics.
The drop in September was particularly severe and reflects the havoc unleashed in global financial markets following the collapse or rescue of a number of banks around the world. The paralysis in money markets that ensued raised questions over companies' access to funding as well as fears of a prolonged global downturn.
"Market conditions were widely reported to be extremely difficult during last month as economic uncertainties related to the ongoing financial crisis continued to dominate decision making," the survey noted.
It said there was "particular weakness" in the financial services industry.
A sharp drop in both new and outstanding business left employers with little choice but to cut jobs. The employment index fell from 47.9 to 47.3, marking a fifth consecutive month of contraction.
Many investors are already persuaded that the Bank of England will cut interest rates to 4.75 per cent at its policy meeting on Thursday. Evidence of cooling price pressures bolster the argument for a rate cut.
The input prices index fell to 65.2, its lowest level since January, from 66.8 while the prices charged index fell to 54.5, its lowest since last December, from 55.2.