UK Business Activity Slowdown Eases – Data
Britain’s private sector economic activity shrank in June but the pace of decline slowed significantly from May as the country eased its coronavirus lockdown, a closely watched survey showed Tuesday.
The composite purchasing managers’ index (PMI) hit a four-month peak at 47.6 points in June from 30 in May, compilers IHS Markit and the Chartered Institute of Procurement and Supply (CIPS) said in a statement.
The figure still languished below the key 50 level, representing a contraction.
Markit added that the manufacturing PMI stood at 50.1 points in June to register marginal expansion.
“June saw a record rise in the PMI for a second successive month, confirming that the economy is moving closer to stabilising after the worst of the immediate economic impact from the COVID-19 pandemic was felt back in April,” IHS Markit chief business economist Chris Williamson said.
He cautioned however that longer term recovery prospects remain “highly uncertain” with weak demand, despite rising confidence and easing restrictions.
“Some of the recent gains in the PMI reflect short-term bounces as businesses returned to work, but demand clearly remains weak, as indicated by a further steep decline in backlogs of orders and an ongoing fall in new orders,” Williamson said.
“Many COVID-19 restrictions and social distancing measures will also need to stay in place until an effective treatment or vaccine is available.”
The data comes after the Bank of England (BoE) last week forecast that the UK economy would fare better than expected as lockdown restrictions are fully eased.
The UK economy contracted by one fifth in April amid a nationwide lockdown imposed on March 23 to try and halt the spread of the coronavirus outbreak.
The BoE predicts that the economy will shrink by another six percent in March, but will start to recover thereafter as both consumer spending and housing activity pick up.