-Adds Detail, Economists’ Reactions To Version Transmitted At 1506 GMT
-UK Aug CIPS Services PMI 53.7 Versus 51.0 In July – Markit/Reuters
-UK Aug CIPS Composite PMI 52.2 Versus 49.5 In July
LONDON (MNI) – UK services sector growth rebounded in August after
weak growth in July, suggesting the rebound in economic activity
expected by many economists in the third quarter could yet materialize.
The headline August CIPS services PMI spiked to 53.7 from 51.0 in
July, taking it well into expansionary territory and pushing the
composite, all sector, PMI up to 52.2 from 49.5 in July. The services
reading was its highest since March.
The August construction and manufacturing PMIs’ headline readings
were both below 50, that is in contractionary territory, but the service
sector dominates the UK economy and its rebound was enough to push the
composite PMI sharply higher.
The services PMI data had been scheduled for release at 0828 GMT
Wednesday, but Reuters inadvertently published the figures early.
Markit said service sector companies saw a further rise in incoming
new business and made fresh inroads into unfinished work.
“Service sector companies reported a welcome rebound in activity in
August following disruptions due to the additional Jubilee bank holiday
and unusually poor summer weather in previous months,” Chris Williamson,
Chief Economist at Markit, said.
“The survey data add to hopes that the economy will pull out of
recession following the 0.5% contraction seen in the second quarter,”
Williamson added.
The Bank of England’s implied forecast in its August Inflation
Report was that growth would spike in Q3, rising by 1.02% on the quarter
after contracting in the previous three quarters. These CIPS data
suggest that expansion, at least, is still possible.
George Buckley, Chief UK Economist at Deutsche Bank, noted,
however, that the composite PMIs pointed to only a 0.1% expansion on the
quarter, but he highlighted the uncertainty in reading across from CIPS’
figures to the official data.
Vicky Redwood, Chief UK Economist at Capital Economics, also said
the data pointed to 0.1% quarterly growth, “suggesting that the economy
may just about be clawing its way out of recession.”
She noted, however, that the CIPS surveys exclude the retail sector
and as its performance recently has been poor it could weigh on Q3
activity.
The CIPS services data, tracking the output side of the economy,
will not, however, pick-up any of the expected boost in Q3 from Olympic
ticket sales and television rights.
The headline August services reading was far stronger than
analysts’ median forecast for a 51.0 outturn.
-London newsroom 0044 207 862 7491; email: drobinson@marketnews.com
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