UK economy continues recovery but jobs still lost

UK economy view of City of London

The latest PMI Survey shows the UK economy growing again in August 2020 following lockdown. Both manufacturing and services sectors showed growth in orders and business.

What are the figures?

The PMI surveys are put together by a research group called IHS Markit. These surveys are considered a respected source of research which ask 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.

  • Overall UK economy rated as 60.3
  • Manufacturing rated as 61.6
  • Services rated as 60.1

The survey issued on 21st August covers August so far.

According to the survey’s Duncan Brock of CIPS;

“Manufacturing led the way with the strongest output growth since April 2014, and service companies reported the boost from government initiatives had brought more consumers back to restaurants and pubs as purse strings were loosened”

Concerns raised over jobs

So most of the companies surveyed said orders were increasing.  At the same time, many also raised concerns about job levels;

“However, as the UK heads for the deepest recession in living memory, any celebration is premature as firms moved from the protection of furlough schemes to the harsh reality of job shedding with employment levels declining at their fastest since May”

How does this compare with other countries?

So, the UK overall figure was 60.3. This is the highest result for the UK in nearly 8 years.  How did other similar countries do?

  • USA 54.7
  • Germany 53.7
  • France 51.7
  • Eurozone* 51.6
  • Japan 44.9

Summary

So, although the PMI survey is just that, a survey, it seems likely the UK economy is growing again and starting to recover from Covid related measures in August so far.  From this survey it seems the UK recovery may also be stronger than other similar economies, however the UK also suffered a larger reduction than most between April to June.

Want to learn more or see where the information came from?

Read the IHS Markit UK press release here.

Learn more about the IHS Markit PMI surveys here

Learn more about NewsBrokerUK here.

Notes

* Eurozone countries are the 19 EU countries that use the Euro currency.