UK economy lost more momentum in August, PMI survey shows

A general view of the financial district of London is seen in London
FILE PHOTO: A general view of the financial district of London is seen in London, Britain, October 19, 2016. REUTERS/Hannah McKay/Files

September 3, 2021

LONDON (Reuters) – Britain’s economic recovery from the COVID-19 pandemic lost more momentum last month than originally estimated as staff shortages and supply chain issues weighed on companies in the country’s huge services sector, a survey showed on Friday.

The IHS Markit/CIPS UK Services Purchasing Managers’ Index (PMI) fell to 55.0 in August, revised lower from a preliminary “flash” reading of 55.5 and down sharply from 59.6 in July.

Overall the survey added to signs that British economic growth has slowed somewhat in the last month or so.

The PMI marked a fifth month above the 50 threshold for growth and a record share of services companies said they were hiring staff – but they also struggled against rising costs.

“Many survey respondents commented on long wait times to fill vacancies and an unexpectedly high staff turnover as the UK economy reopened,” said Tim Moore, economics director at IHS Markit.

A separate survey published earlier on Friday by the Recruitment & Employment Confederation also showed employers were still hunting for more staff than they were just before the pandemic, added to signs of a tight labour market after COVID-19 lockdowns and Brexit.

IHS Markit said consumer demand slowed last month after an initial post-lockdown surge.

Others said a slowing property market caused by partial withdrawal of a tax break on home purchases, a lack of tourists and Brexit trade frictions dampened growth too.

The composite PMI, which combines the services and manufacturing sectors, fell to 54.8 in August from 59.2 in July.

(Reporting by Andy Bruce; Editing by William Schomberg and Toby Chopra)