The number was dragged down by the manufacturing sector, which stalled last month.
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The service industry, encompassing everything from hairdressers to accountants, roared back in August, enjoying the biggest industry recovery in 20 years after the shock of the previous month’s post-referendum slump in confidence, said the Chartered Institute for Procurement and Supply’s purchasing managers’ index.
Growth in services was already subdued before the European Union referendum, with a score of 52.3 in June – the lowest in more than three years.
The pound rose 0.4% against the dollar following the update to 1.335 U.S. dollars.
Growth in China’s services sector picked up in August as new orders rose modestly, employment stabilized and business expectations rose to a six-month high, a private survey showed on Monday.
The sector swung back to growth in August as companies reported that uncertainty had eased.
“The rise in the headline activity balance of from 47.4 in July to 52.9 (consensus 50.0) was the largest monthly increase in the history of the survey and follows the rebounds in the manufacturing and construction PMIs seen last week”, he writes.
New business and exports in the services sector slowed last month, with some companies reporting fewer orders from the United Kingdom after the Brexit referendum.
Japan’s economy looks to be stagnating in the third quarter, with the composite Nikkei PMI falling slightly below the neutral level of 50.0 to register a marginal drop in business activity, reversing a fractional rise in July.
Firms linked positive output expectations over the next 12 months to export opportunities, reduced uncertainty, stable markets, product launches, expansion plans and a recovery in the energy sector. The outcome of a lower pound is rising prices – both input and output prices are at five year highs indicating inflation might pick up sharply which could restrict any improvement in the United Kingdom economy.
The euro fell 0.4 percent to 83.56, its lowest since early August, and down from 83.89 before the survey was released.
This suggested that the United Kingdom economy may avoid an imminent recession, he added. Although rising, the PMI readings for the last two months point to annual global GDP growth of only 1.5% in the third quarter, suggesting the global economy remains locked in its slowest growth phase for just over three years. It is also pumping 80 billion euros ($90 billion) of new money into the economy every month by buying bonds from banks and companies in the hope of keeping a lid on borrowing rates in the real economy to encourage lending and promote business activity.
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He added: ‘Brexit is going to be a lengthy process, with plenty of ups and downs along the way, so economically speaking it’s still way too early to start counting any chickens just yet.
