Services sector enjoys fastest growth since 2015, but job losses mount
Britain’s dominant services sector grew at its fastest pace for more than five years in August but firms ramped up “fierce” job cuts in the face of the pandemic, according to new figures.
The closely-followed IHS Markit/CIPS services purchasing managers’ index (PMI) recorded a score of 58.8 in August, up from 56.5 in July – signalling the second month in a row of growth and the sharpest increase since April 2015.
A reading above 50 indicates expansion in the sector.
Combined data for the manufacturing and services sector suggested solid growth across the economy last month, pointing to the fastest growth in the UK private sector for six years.
But the rate of job-cutting across the services sector accelerated at its fastest rate since May and is now at levels that outstripped even those seen during the financial crisis of 2008 and 2009.
Chris Williamson, chief business economist at survey compiler IHS Markit, warned that, while the UK economy is enjoying a mini-boom, the threat of a “bounce and slump” looms large.
He said: “A further surge in service sector business activity in August adds to signs that the economy is enjoying a mini-boom as business reopens after the lockdowns, but the concern is that the rebound will fade as quickly as it appeared.
“The current expansion is built on something of a false reality, with the economy temporarily supported by measures including the furlough and Eat Out To Help Out schemes. These props are being removed.
“The burning question is how the economy will cope as these supports are withdrawn.”