Growth in the services industry lost momentum in August, indicating an overall contraction in the economy across all sectors and a drop in GDP, leaving the UK one step away from a recession.
The service sector’s purchasing managers’ index (PMI) dropped to 50.6 in August, down from 51.4 in July. Any figure under 50 indicates a contraction. Coupled with lacklustre manufacturing and construction output, the UK’s all-sector PMI dropped to 49.7 in August – falling below the predicted 50.5.
The drop in all-sector PMI is consistent with a decline in GDP of 0.1 per cent in the third quarter. GDP had already declined 0.2 per cent in the second quarter; two consecutive contractions mean the economy is in recession.