British businesses are 'shrugging off' worries about Brexit

Britain’s services sector, which accounts for more than 75% of the country’s GDP, continued its recovery from the initial shock of the Brexit vote in September,
according to the latest PMI data from IHS Markit, released on Wednesday morning.

The services sector — which accounts for everything from banking to waitressing — drew a reading of 52.6 in the month, slightly down from August’s 52.9, but well above the flash estimate of 52 produced last week.

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.

Here’s IHS Markit’s chart of the PMIs longer-term trend:

The PMIs seem to suggest that British businesses are now shrugging off the initial shock of the vote, getting back to normal. As Chris Williamson, Chief Business Economist at IHS Markit notes (emphasis ours):

“The survey results suggest that the economy has regained modest growth momentum since the EU referendum, with further service sector expansion accompanied by a return to growth in construction and an especially strong revival of manufacturing.

“Across the three sectors, the pace of economic growth signalled was the strongest since January, fuelling greater job creation as companies shrugged off short-term Brexit worries and enjoyed the benefits of a weaker currency.

The services numbers complete a trio of pretty solid PMI readings over the past week. Over the last couple of days, both the manufacturing and construction sectors came in substantially higher than had been expected, suggesting once again that the early uncertainty after the Brexit vote has now almost completely worn off.

Earlier on Wednesday, the latest PMIs for the eurozone came in as expected, but showed that European businesses are worried about the future, and as a result are deferring investment, stunting growth.

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