UK services data ease recession fears

The British economy rises again: after the collapse of the economic data in July, the month of August marks a turnaround. Today, Markit issued the UK services data, which recorded a strong rise from 47.4 to 52.9 points. And so, though in July there had been the lowest level in last seven years, August recorded the largest month-on-month gain in its 20-year history.

Chris Williamson, economist at Markit, said the figures, claiming that, "the risk of an imminent recession would be avoided", although he called for caution, arguing that as well as July data would have overestimated the effects of Brexit , those of August would show excessive optimism, the average of the two months, then push to show cautious.

However Williamson added: "Many companies are seeing business return to normal either simply by rising customer confidence or a stoic determination to 'Buck Brexit' and carry on regardless."
Several factors, including the weaker pound, the formation of a new government and the new stimulus of the Bank of England have helped reduce the uncertainty compared to July. Many companies are back to normal. Also assumptions have started to grow thanks to the signals they see the activities back to normal after the uncertainty caused by the shock result of the referendum in which the majority of the British expressed his desire to leave the European Union.

Some analysts think the data indicates the UK might avoid recession later this year. "The prospect of sterling strength is on the horizon as today's PMI figures suggest that the reported fall in activity following the EU referendum may have been a blip," said Ranko Berich, from Monex Europe.

But other analysts warned, as Neil Wilson, markets analyst at ETX Capital, who said: "These PMIs are only surveys – more hard economic data over the coming months will be crucial. It's easy to read too much into a survey for a single month. We are not out of the woods yet".