Economy has ‘mountain to climb’ as it returns to growth
Experts have warned the UK has a mountain to climb even as new figures show large parts of the private sector have returned to growth as the country recovers from the worst of lockdown.
Flash PMI figures have hit 57.1 so far in July, up sharply from 47.7 last month.
The number comes from the closely watched Purchasing Managers’ Index (PMI), which is compiled every month by IHS Markit and the Chartered Institute of Procurement & Supply (CIPS).
They are a preview of the final figures, which are due in early August.
It makes July the third month in a row that the PMI score has improved from an all-time low of 13.8 in April, and is the fastest expansion since June 2015.
But IHS Markit’s Chris Williamson sounded a note of caution.
“While the recession looks to have been brief, the scars are likely to be deep,” he said.
“Even with the July rebound there’s a long way to go before the output lost to the pandemic is regained and, while businesses grew more optimistic about the year ahead, a V-shaped recovery is by no means assured.
Many companies are still experiencing low demand and are cutting jobs, which in turn could drive down demand further as households tighten their belts.
Mr Williamson said: “July’s PMI represents a step in the right direction but there is a mountain still to climb before a sustainable recovery is in sight.”
The manufacturing sector scored 53.6 in July compared to 50.1 in June.
It is the sector’s highest point on the index since March last year.
The UK’s vital services sector meanwhile rose from 47.1 last month to 56.6 in July – the fastest expansion in half a decade.
Duncan Brock at CIPS said: “Amidst this brightening picture, there were some winners and losers.
“Some parts of the economy performed better than others, both through luck with being early to reopen and good adaptation in responding to the challenges of the pandemic.
“The biggest concern is that staffing levels remained disappointingly low across both sectors as furlough schemes came to an end and redundancies started to appear.”