UK economy continues recovery but jobs still lost in September

UK economy view of City of London

The latest PMI Survey shows the UK economy growing again in September 2020 following lockdown.  However, the pace of recovery is slowing down and job losses are increasing.

What are the figures?

IHSMarkit 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 55.7 (August figure was 60.3)
  • Manufacturing rated as 54.3
  • Services rated as 55.1

The survey issued on 23rd September covers September so far.

According to the survey’s Duncan Brock of CIPS;

“The effects of covid restrictions continued to suffocate the UK economy this month as some of the recent gains in the manufacturing and services sectors were lost, and supply chains continued to suffer bouts of instability with stock shortages and longer delivery times.

With the weakest overall optimism since May when the recovery started, the fragility of the economic recovery has been revealed

Concerns raised over jobs

Despite this concern, most of the companies surveyed said orders were increasing.  At the same time, many also raised worries about job levels.  According to Chris Williamson of IHS Markit;

“However, jobs continued to be cut at a fierce rate in September as firms sought to bring costs down amid weak demand, meaning unemployment is likely to soon start rising sharply from the current rate of 4.1%. The indication from the survey that growth momentum is quickly lost when
policy support is withdrawn underscores our concern over the path of the labour market once the furlough scheme ends next month, and raises fears that growth could fade further as we head into the winter months, especially as lockdown measures are tightened further.”

How does this compare with other countries?

So, the UK overall figure was 55.7.  How did other similar countries do?

  • Germany 53.7
  • France 48.5
  • Eurozone* 50.1
  • Japan 45.5

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 September so far.  As the recovery continues, job losses now seems to be a major issue for employers and employees.

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.

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.