The service sector in the UK is continuing its recovery following the shock EU referendum result in June, according to the latest Purchasing Managers’ Index (PMI) data from Markit.
The index retreated from 52.9 in August to 52.6 in September, although remained over the 50 level which indicates growth. That makes it the second month in a row for the expansion trend following a sharp drop in July due to uncertainty surrounding Britain's decision to leave the EU.
But the rate of expansion last month remains on the weaker side when compared to historic data, running below its long-run level of 55.1. Better news comes from new business, which rose at the fastest pace since February, while job creation also picked up.
IHS Markit chief business economist Chris Williamson says: ‘The survey results suggest that the economy has regained modest growth momentum since the EU referendum, with further service sector expansion accompanied by a return to growth in construction and an especially strong revival in manufacturing.’
However, the weaker pound is an issue as it exerted upward pressure on costs in September. Input price inflation is at its highest since February 20313, forcing service providers to raise charges at the fastest rate since 2014.
Chartered Institute of Procurement & Supply CEO David Noble says: ‘Though business optimism improved further from July’s seven-and-a-half year low, and was the strongest for three months, disquiet around Brexit still remained.’