Services sector reports growth in the face of Brexit uncertainty?
The UK services sector has seen a rise in activity in August following a record drop in July thought to be a result of disruption related to the EU referendum.
This is according to PMI survey data from HIS Markit and CIPS, which has reported that the month-on-month gain in August was the largest observed over the 20-year survey history.
The renewed expansion of total activity was supported by a resumption in growth of new business in August. New work rose at the fastest pace in four months, having previously fallen at the strongest rate since March 2009 in July.
Companies linked greater demand to new clients, higher export business linked to the weak pound, higher domestic tourism and returning confidence following initial disruption related to the Brexit vote.
New business growth was weaker than the long run survey trend, but sufficiently strong to generate a rise in outstanding work at services providers for the first time in five months. Job creation in the services sector resumed in August following a pause in July.
Senior sales trader at Foenix Partners, Alex Lydall, said: Mark Carney and his Bank of England colleagues could be excused for murmuring what Brexit this morning, after a spectacular print for the services sector, with the increase from July’s figure being the largest month-on-month gain since the 20-year survey began.
bearing in mind the services sector is such a crucial part of the UK economy, the bullish print only continues the pattern that the manufacturing sector started last week, giving August figures a strong outlook in a month many worried the onset of the referendum result may weigh on the UK. With markets appearing to be dealing effectively in the immediate aftermath of the Brexit, the short-term sterling outlook could perhaps not be a bleak as many traders? anticipated just a few weeks ago.
Letitia Booty is a special projects journalist for Business Advice. She has a BA in English Literature from the University of East Anglia, and since graduating she has written for a variety of trade titles. Most recently, she was a reporter at SME magazine.
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