The UK recovery lost momentum in August amid shortages of staff and materials, according to a survey released on Monday.
The IHS Markit/CIPS composite purchasing managers’ index – which measures activity in the services and manufacturing sectors – fell to 55.3 from 59.2 in July, hitting its lowest level since February and coming in below expectations for a reading of 58.4.
The PMI declined for the third month in a row and signalled the slowest expansion of output since the UK returned to growth in March. Still, it was above the 50.0 mark that separates contraction from expansion.
Chris Williamson, chief business economist at IHS Markit, said: “Although the PMI indicates that the economy continues to expand at a pace slightly above the pre-pandemic average, there are clear signs of the recovery losing momentum in the third quarter after a buoyant second quarter.
“Despite Covid-19 containment measures easing to the lowest since the pandemic began, rising virus case numbers are deterring many forms of spending, notably by consumers, and have hit growth via worsening staff and supply shortages.
“Supplier delays have risen to a degree exceeded only once before – in the initial months of the pandemic – and the number of companies reporting that output had fallen due to staff or materials shortages has risen far above anything ever seen previously in more than 20 years of survey history.”
Kieran Tompkins, assistant economist at Capital Economics, said: “Overall, the large fall in the composite PMI suggests that the economic recovery might be slowing a bit faster than we had thought. That poses a downside risk to our forecast for the economy to return to its pre-pandemic level by October.”
