Job losses at British companies accelerated in August despite an upturn in demand, a survey showed on Thursday, in a bleak sign ahead of the closure of the government's coronavirus furlough scheme at the end of next month. The IHS Markit/CIPS Composite Purchasing Managers' Index (PMI), a monthly gauge of activity in services and manufacturing companies, rose to a six-year high of 59.1 from 57.0 in July.
Still, that was revised down from a preliminary "flash" reading of 60.3, hinting at a weaker end to activity last month. Some economists view the current strength of the PMI with scepticism because it reflects an inevitable increase in businesses reporting growth as the economy reopens, rather than a recovery in output that could take years.
The survey's index of employment declined for the first time in three months - chiming with widespread reports of layoffs from major employers grappling with the hit from the pandemic. Chris Williamson, chief business economist at IHS Markit, said companies' ability to cope with the withdrawal of economic support measures like the furlough programme was now the "burning question".
The government's job retention scheme has supported almost 10 million jobs in total since its launch in April."Worryingly, many companies are already preparing for tougher times ahead, notably via further fierce job cutting," Williamson said. "Policymakers face a huge challenge in sustaining this recovery and avoiding a 'bounce and fade' scenario." The services PMI rose to 58.8 in August from 56.5 in July, the highest reading since April 2015, although it was revised down from a preliminary reading of 60.1.
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