PMI survey UK Services improving but still contracting
The latest PMI Survey confirms the UK Services sector is improving but still contracting from the lockdown. However, the figures are a big improvement. The rate of contraction has slowed down.
What are the figures and what do they mean?
- Our Services sector is rated as 47.1 for June, up from 29 in May.
The PMI surveys are put together by a research group called IHS\Markit. These surveys are considered as a respected source of research that asks companies how they are doing. For example they ask whether orders and sales are up or down. Whilst the PMI surveys are not official economic statistics, they are a useful indicator of how things might be going, and are released before the official numbers.
IHS\Markit issue an index number for each survey. If the number is 50 or higher, it means that the economy is growing. If the number is 49.9 or less, it means the economy is contracting.
According to the survey’s Tim Moore of IHS Markit;
“June data highlights that the worst phase of the service
sector downturn has passed as more businesses start to
reopen and adapt their operations to meet social distancing
requirements. The proportion of service providers reporting
a drop in business activity has progressively eased after
reaching a peak of 79% in April. Around 33% of the survey
panel signalled a reduction in business activity during June,
which compared with 54% in May”.
What about Services jobs?
Although the Services sector is moving towards recovery, the survey also highlighted concerns many companies have about jobs and employment. According to Duncan Brock of CIPS*;
“As the sector regains some momentum, employment levels
amongst services personnel remain deeply concerning.
Businesses securing their premises to ensure covid safety for
staff and customers means operating costs are rising. Some
firms are resorting to heavy discounting, others accelerating
innovative solutions to change their operating model to stay
in business. For others, the decision to shed jobs may be the
only solution as the fight for survival continues and the UK
economy grits its teeth for the months ahead.”
How does this compare with other countries?
We know the UK Services figure was 47.1. How did other similar countries do?
- France 50.7
- USA 47.9
- Eurozone* 48.3
- Germany 47.3
- Italy 46.4
- Japan 45
- Ireland 39.7
Although the PMI survey is just that, a survey, it seems likely our Services sector has started its recovery from the recent shutdowns.
Sources & Notes
Several press releases for other countries Services PMI available here;
* Eurozone countries are the 19 EU countries that use the Euro.
* CIPS is the Chartered Institute of Procurement and Supply.