UK recession fears dip as business optimism back to pre-Brexit levels
Fears of a UK recession in the wake of the Brexit vote may be receding, a closely watched survey has found, with the services sector there recording its biggest monthly jump in activity in the gauge's 20-year history.
The pound surged to a seven-week high on the back of the data from the Purchasing Managers Index for the sector.
New business rose at the fastest pace in four months, having previously fallen at the strongest rate since March 2009 in July.
Companies linked greater demand to new clients, higher export business linked to the weaker pound, and higher domestic tourism and returning confidence following the initial disruption linked to the Brexit vote.
Chris Williamson, economist with financial services firm, Markit, said the rise in the services PMI adds to the encouraging news seen in the manufacturing and construction sectors in August to suggest that "an imminent recession will be avoided".
"Business optimism ricocheted back to pre-Brexit levels, reassured by market stability and clients bringing dormant projects back to life," he said.
"Whether this steadiness continues will largely depend on the sector's reaction to the UK government's approach to the Brexit negotiations as the sector keeps one eye on business as usual and one eye on possible obstacles ahead."
The business activity index rebounded to 52.9 in August, from 47.4 in July.
The month-on-month gain in the index, at 5.5 points, was the largest observed over the survey's 20-year history.