Markit’s Purchasing Managers’ Index came in at 52.6 in September, indicating that the UK services sector is recovering quickly from the economic shock of the UK’s decision to leave the EU in June’s referendum. The services sector accounts for nearly 80% of the UK economy and includes a diverse range of services including hairdressers and banks. Due to the size of sector, and it’s centrality to the UK economy, it has been a focus of economic concerns following the Brexit vote.
The index had fallen to 47.4 in the immediate wake of the Brexit vote, but then rose to 52.9 in August – the biggest one-month jump in the survey’s 20 year history. A figure of 50 or more indicates growth and proves that, contrary to economists’ expectations that activity in the sector would be flat in the months following a Brexit vote, the UK services sector has been growing for the last two months. The figures, coupled with those released from surveys carried out on the manufacturing and construction sectors and reported by us earlier this week, indicates that the UK economy has managed to grow in the quarter following the Brexit vote. The US services sector also performed better than expected in September, with September’s final purchasing manager’s index increasing to 52.3 from August’s 51.5.
It is hoped that the surveys will go some way to relieving both domestic and international concerns at the state of the UK economy. The figures will be welcomed by Chancellor of the Exchequer, Philip Hammond, who visits Wall Street today in an effort to reassure American banks that London is still “open for business”, and that the city will remain the world’s leading financial centre when the UK leaves the EU. Mr Hammond is due to meet officials from top US banks including Goldman Sachs, Morgan Stanley and Citigroup.