U.K. Services Show Resilience in Face of Mounting Virus Risks

(Bloomberg) -- The U.K.'s dominant services sector grew faster than initially reported last month even as risks from the virus and Brexit stacked up and government support was withdrawn.

IHS Markit's Purchasing Managers Index for the industry stood at 56.1 in September, the company said Monday -- slightly above a flash estimate, and well above the 50 level that indicates growth. A gauge for the whole economy also came in slightly higher.

Growth remained solid even as the government's restaurant subsidy plan was removed and firms continued to cut jobs as employment support programs were tapered. Markit cautioned that optimism for the months ahead had cooled amid a fresh wave of virus restrictions, meaning that “risks for the coming months lie skewed to the downside.”

“While the third quarter will inevitably see a strong economic rebound, growth in the fourth quarter looks likely to be far less impressive,” said Chris Williamson, chief business economist at IHS Markit. “Brexit worries are also rising again, causing hesitancy in spending and investment decisions.”

That outlook echoes the consensus view among Bank of England policy makers. Still, the BOE's chief economist, Andy Haldane, has cautioned against undue pessimism, saying such anxiety could become self-fulfilling and as harmful to Britons' wellbeing as Covid-19.

©2020 Bloomberg L.P.