UK Economics

Britain is on the up again! Services sector shows biggest EVER monthly rise defying gloomy predictions over the impact of the EU referendum

  • Key indicator finds services sector rebounded strongly in August after dip
  • PMI rating went up to 52.9 last month reducing fears of recession
  • Latest sign that the Brexit vote has not damaged consumer confidence

Brexit doom-mongers suffered a fresh blow today as figures showed the UK’s service sector rebounding strongly.

A key survey found there was a record jump in business activity last month after a dip in the immediate aftermath of the vote to leave the EU.

The ‘PMI’ index for August rose to 52.9 from 47.4 in July. Economists had predicted the figure would be around 50 – which would have indicated zero growth.

The PMI figures showed the services sector was growing in August after a dip in July 

The sector, covering everything from hairdressers to restaurants and banks, is crucial as it makes up almost four-fifths of UK plc.

July’s fall in the index – the full title of which is the Markit/CIPS purchasing managers’ index – had been the biggest on record.

But the latest data will pour cold water on fears that the country could slump into recession as a result of panic over Brexit.

Evidence is building that consumer confidence remains robust, with retail sales exceeding gloomy predictions and house prices still apparently buoyant.

The unemployment benefit claimant count also surprised many by falling in the month after the referendum.

The pound rose 0.4 per cent against the dollar following the update to 1.335 US dollars.

Sterling was also up 0.3 per cent against the euro at 1.194 euros.

The services sector swung back to growth in August as companies reported that uncertainty had eased.

The report said the month-on-month gain of 5.5 points was the biggest leap since the survey began 20 years ago.

Output picked up after new work grew at its fastest pace for four months, after the pound’s slump to 31-year lows following the EU referendum result lifted the demand for exports and bolstered UK tourism.

The sector also saw confidence return to its pre-Brexit vote levels, while employment also notched up in August following a pause in July.

Businesses in the industry were feeling more confident about export opportunities, stable markets and reduced uncertainty, while some were lifted by signs of recovery in the energy sector, the report said.

However, the weaker pound ramped up costs to a near three-year high, causing services firms to bump up their prices at the fastest rate since January 2014.

Retail sales and consumer surveys have suggested that confidence has not been badly hit by the EU referendum result

Leave a Reply

Help put the World to rights and leave a Comment

Notify of
Powered by: Wordpress
%d bloggers like this: