The UK economy shrank at a faster rate in May than during the global financial crisis as the coronavirus continued to hammer companies and jobs, new figures show.
A closely watched business survey showed services and manufacturing firms’ output declined at its second fastest pace since the survey began in 1998, better only than the record contraction in April.
Firms reported a dire shortage of new work and many said they feared it could take a long time for business to recover, though optimism ticked slightly higher.
The figures were released in the latest purchasing managers’ index for the services sector in May, compiled by IHS Markit and the Chartered Institute of Procurement & Supply (CIPS).
“Lower volumes of business activity were again almost exclusively linked to business shutdowns, cancellations of customer orders and a general slump in demand amid the coronavirus disease,” said the report published on Thursday.
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The survey is a widely followed gauge of business activity in Britain, with figures above 50 on the index showing growth and figures below 50 showing decline. This month’s combined services and manufacturing figures came in at 28.9, well above last month’s dire 13.8 reading but still worse than during the 2008-9 crisis.
“The UK economy remains firmly locked in an unprecedented downturn, with business activity and employment continuing to slump at alarming rates in May,” said Chris Williamson, chief business economist at IHS Markit.
Michael Hewson, chief markets analyst at CMC Markets, said: “For all of the underlying optimism that the worst is over in the short term, as we head into the heat of the European summer months, and the talk of holiday destinations re-opening from 1July, there is some concern that a second wave is only a matter of time.”
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