Economic recovery had lost steam before virus crackdown, figures show 

Britain’s economic recovery was slowing down even before the Government imposed new lockdown restrictions this week, figures suggest.

Growth in the manufacturing sector and its dominant services sector pulled back in September, according to IHS Markit’s closely- watched Purchasing Managers’ Index (PMI).

But the UK was faring better than the eurozone, where manufacturing activity only just kept its head above water and the services sector contracted sharply.

Slowdown: Growth in the manufacturing sector and its dominant services sector pulled back in September, according to IHS Markit¿s closely- watched Purchasing Managers¿ Index

Slowdown: Growth in the manufacturing sector and its dominant services sector pulled back in September, according to IHS Markit¿s closely- watched Purchasing Managers¿ Index

Slowdown: Growth in the manufacturing sector and its dominant services sector pulled back in September, according to IHS Markit’s closely- watched Purchasing Managers’ Index

In the UK, the services PMI recorded a three-month low reading of 55.1 in September, down from 58.8 the previous month. 

Any reading above 50 indicates growth. The manufacturing PMI eased back to 54.2 from a 30-month high of 55.2 in August.

Part of the fall in the services sector was due to the Eat Out to Help Out venture ending on August 31. It had prompted diners to flock to buy discounted meals, with more than 100m claimed.

But Chris Williamson, chief business economist at IHS Markit, said: ‘Demand for other consumer-facing services also stalled as companies struggled amid new measures to fight rising infection rates, and consumers often remained reluctant to spend.’

Services is expected to take more punishment as workers stay at home and a 10pm curfew is imposed on restaurants and pubs in England. 

Confidence in future output was also low, with IHS Markit saying businesses cut jobs for a seventh consecutive month, the longest such run since 2010.

Williamson said: ‘Jobs continued to be cut at a fierce rate, meaning unemployment is likely to soon start rising sharply from the current rate of 4.1 per cent.’

Thomas Pugh, an economist at Capital Economics, said the figures ‘suggest that the recovery has already started to flatten out’.

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