Rapid growth recorded in service sector

There were further signs of a post-lockdown mini-boom in the UK economy after figures showed the fastest service sector growth since 2015, but firms ramped up “fierce” job cuts in the face of the pandemic.

The closely-followed IHS Markit/CIPS services purchasing managers’ index (PMI) recorded a score of 58.8 in August, up from 56.5 in July – signalling the second month in a row of growth and the sharpest increase since April 2015.

A reading above 50 indicates expansion in the sector.

Combined data for the manufacturing and services sector suggested solid growth across the economy last month, with a reading of 59.1 pointing to the fastest expansion in the UK private sector for six years.

Strong consumer spending is said to be among the drivers of the rebound, though the reading was lower than the recent 60.3 “flash” PMI estimate.

But the rate of job-cutting across the services sector accelerated at its fastest rate since May and is now at levels that outstripped even those seen during the financial crisis of 2008 and 2009.

Retailers, restaurants and other services firms have been axing tens of thousands of jobs following the lockdown, with enforced closures hitting the sector hard.

Chris Williamson, chief business economist at survey compiler IHS Markit, said: “The current expansion is built on something of a false reality, with the economy temporarily supported by measures including the furlough scheme.

The threat of a “bounce and slump” looms large as government schemes come to an end, he warned.