The recovery of the British economy slowed sharply in August, according to the preliminary composite index of Purchasing Managers’business activity Index (PMI). The indicator fell for the third time in a row, falling to 55.3 points compared to 59.2 points in July. This is the lowest level since February, according to Reuters.
The difficulties faced by the country are due to an unprecedented shortage of labor and materials. At the same time, the growth rates are still slightly higher than the pre-pandemic ones, but IHS Markit experts, which calculates the index, believe that the recovery is clearly slowing down after the success of the second quarter. The decline in the PMI is mainly due to the problems of the service sector, which is key for the UK economy.
“Despite the fact that measures to contain the coronavirus have become the least stringent since the beginning of the pandemic, the increase in the number of infections is holding back spending, especially consumer spending, and hitting growth due to the deteriorating labor situation and supply problems,” said Chris Williamson, a chief business economist at IHS Markit.
Companies in the UK complain that the requirements for self-isolation for people who have been in contact with the sick have created difficulties in finding staff. These restrictions were lifted for fully vaccinated citizens from August 13. “Some businesses find it difficult to find employees. Given that supply chain disruptions persist, inflationary pressures are still a concern, although the growth rate of the consumer price index softened in July, “ explained Lloyds Bank economist Rhys Herbert.
In July, supply difficulties caused by anti-coronavirus measures led to the risk of a shortage of products in British stores. At that time, supermarkets could not fully fill the shelves due to a shortage of labor-hundreds of thousands of employees were forced to go into isolation at the request of a special official application that tracks contacts with patients. In August, the authorities had to ask for help with the delivery of food from the armed forces.