The UK services sector “emerged tentatively from the shadows” in June, with data continuing to indicate a turnaround for the industry as the country emerges from the coronavirus lockdown.
A closely watched survey by IHS Markit found that the sector’s purchasing managers’ index (PMI) reading came in at 47.1 in June, up sharply from 29.0 in May the all-time record low of 13.4 in April.
The services sector is hugely important to the UK economy — it includes finance, law, retail, engineering and consulting — and makes up about 45% of the country’s exports.
PMIs are an indicator of private sector activity and are given on a scale of 1 to 100. Anything above 50 signals growth. Because anything below 50 signals a decline, the figure indicates that the UK economy contracted once again in June, even if the pace was slower than that seen in previous months.
The headline reading, which was the highest in four months, came as respondents noted that the easing of lockdown measures and the subsequent reopening of the UK economy had a favourable impact on business activity, IHS Markit said.
“June data highlights that the worst phase of the service sector downturn has passed as more businesses start to reopen and adapt their operations to meet social distancing requirements,” said Tim Moore, economics director at IHS Markit.
“The proportion of service providers reporting a drop in business activity has progressively eased after reaching a peak of 79% in April. Around 33% of the survey panel signalled a reduction in business activity during June, which compared with 54% in May.”
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