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The dominant sector of the British economy has started to 'buck Brexit'

Sep 5, 2016, 14:09 IST

Out of control!REUTERS/Todd Korol

Britain's services sector, which accounts for more than 75% of the country's GDP, is fighting back, and has started to "Buck Brexit", according to the latest PMI data from IHS Markit, released on Monday morning.

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The services sector - which accounts for everything from banking to waitressing - saw a reading of 52.9 in August, compared with expectations of 50 from economists, and rebounding from a horrible July following the UK's vote to leave the European Union.

The purchasing managers index (PMI) figures from IHS Markit are given as a number between 0 and 100.

Anything above 50 signals growth, while anything below means a contraction in activity - so the higher the number is, the better things look for the UK.

Speaking about Wednesday's services data, Markit's chief economist, Chris Williamson, said (emphasis ours):

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"A record 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."

"It remains too early to say whether August's upturn is a dead cat bounce or the start of a sustained post-shock recovery, but there's plenty of anecdotal evidence to indicate that the initial shock of the June vote has begun to dissipate. Many companies are seeing business return to normal either simply by customer confidence rising or a stoic determination to "Buck Brexit" and carry on regardless."

Here is Markit's chart, showing just how massive the bounce-back since July has been:

IHS Markit

The services numbers complete a trio of better than expected PMI readings over the past week. Last week, both the construction and manufacturing sectors bounced back from horrible data in July. According to IHS Markit, the construction sector is moving "closer to stabilisation" and has bounced back admirably from a horrible month in July, while manufacturers saw their biggest single month jump in sentiment in the history of PMI surveys.

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