The UK’s services industry rebounded strongly in August, suggesting the country will avoid recession, according to a report from Markit/CIPS.
The Purchasing Managers’ Index (PMI) showed that activity in UK services recorded the biggest month-on-month rise in the survey’s history rising from 47.4 in July to 52.9 in August. A score above 50 indicates growth. Markit said this effectively takes services back to pre-referendum levels.
The PMI is a survey of business managers, gauging whether their firm’s activity has increased compared with the previous month. The return to growth for the services industry – which accounts for nearly 80% of the UK economy – adds to signs of recovery in manufacturing and construction last month.
There had been fears of two consecutive quarters of falls in economic growth – the usual definition of a recession – but Chris Williamson, chief economist at Markit, said the survey findings suggested there would be a modest 0.1% expansion in GDP in the three months to September.
Last month’s recovery in services wiped out a shock fall in July following the Brexit vote. “A record rise in the services PMI adds to the encouraging news seen in the manufacturing and construction sectors in August to suggest that an imminent recession will be avoided,” Mr Williamson said.
It is still too early to call the “start of a sustained post-shock recovery, but there’s plenty of anecdotal evidence to indicate that the initial shock of the June vote has begun to dissipate”, he said.
He added: “Many companies are seeing business return to normal either simply by customer confidence rising or a stoic determination to ‘Buck Brexit’ and carry on regardless.”