Economic Collapse: UK lurches towards recession as dominant services sector stalls: ‘It’s clinging on by its fingertips’
Economy on course to shrink for second consecutive quarter amid rising Brexit worries, surveys indicate
Chris Baynes Wednesday 4 September 2019. The Independent.
Growth in the services industry, which accounts for nearly 80 per cent of Britain’s economy, almost stalled last month as business confidence plunged to its lowest level in more than three years, according to the closely watched IHS Markit/CIPS UK Purchasing Managers’ Index (PMI).
The private sector as a whole contracted in August after manufacturing and construction suffered continued slumps, the survey found.
“So far this year the services economy has reported its worst performance since 2008, with worrying weakness seen across sectors such as transport, financial services, hotels and restaurants, and business-to-business services,” said IHS Markit’s chief business economist Chris Williamson.
“After surveys indicated that both manufacturing and construction remained in deep downturns in August, the lack of any meaningful growth in the service sector raises the likelihood that the UK economy is slipping into recession. While the current downturn remains only mild overall, the summer’s malaise could intensify as we move into autumn.”
The service sector’s PMI registered a reading of 50.6 for August, down from 51.4 in July and well below a long-term average of 54.9. A reading below 50 indicates contraction, while higher than 50 shows growth.
Duncan Brock, group director at the Chartered Institute of Procurement and Supply, said the sector had “clung on by its fingertips this month” as overseas clients “abandoned spending in favour of a wait-and-see approach and the political environment became increasingly murky”.
He added: “There’s only so much companies can do to absorb costs before UK consumers notice the impact to their wallets, and only so much Brexit indecision the sector can take before it is tipped into contraction.
Business confidence about the next 12 months in the service sector dropped in August to its lowest point since July 2016, the month after the referendum on membership of the European Union (EU).
Categories: Economic Collapse