The report from
IHS Markit and Chartered Institute of Procurement & Supply (CIPS) indicated
on Friday that the worst phase of the service sector downturn had passed as
more businesses start to reopen and adapt their operations to meet social
distancing requirements.
According to
the report, the Markit/CIPS UK Services Purchasing Managers' Index (PMI) jumped
to 47.1 in June from 29.0 in May, signaling a continuing turnaround in business
conditions across the UK service sector.
Economists had
forecast the indicator to increase to 47.0. The 50 mark divides contraction and
expansion.
The latest
reading was the highest since February, but still under the neutral 50.0
threshold.
According to
the report, subdued demand and disruptions related to the COVID-19 pandemic were
cited by respondents as factors constricting business activity in June, while an
easing of lockdown measures and reopening of the UK economy had a favourable
impact on business activity.
Inflows of new
work fell the least since the downturn began in March. Meanwhile, export sales
continue to decline at a steeper rate than overall new business volumes during
June, reflecting ongoing international travel restrictions. Elsewhere, backlogs
of work across the UK’s service sector recorded another steep reduction in
June, while the rate of job shedding eased to its least marked since the start
of the downturn in March.
The UK All
Sector Output Index, a weighted average of the UK Manufacturing Output Index,
the UK Total Construction Activity Index and the UK Services Business Activity
Index, came in at 47.7 in June, up from 30.0 in May. This was the highest
reading for four months.
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