Workers may yet be slow to return to the office but traffic levels are speeding up, according to the Department of Transport. Road traffic is gradually returning normal. Schools are re-opening. The volume of car traffic is returning to levels pre lock down. Light commercial vehicle traffic is already back to the levels of early March.
So is the recovery speeding up? The latest survey data from IHS Markit, suggests manufacturing production is rising at the fastest pace since May 2014. The overall volume index increased to 55.2 from 53.3 prior month. Output and new orders increase at "accelerated" rates as businesses re-opened.
The service sector reported a further rise in activity in August. The headline index increased to 58.8 in the month, up from 56.5 in July. This was almost double the levels of activity reported in the second quarter. A quarter in which the drop in GDP(O) for the sector was 20%. Providers reported the sharpest increase in new work since December 2016. Pent up demand in the housing market and the success of the "Eat Out To Help Out" scheme boosted the growth in activity.
Output in the construction sector continued in positive trend. The headline index registered 54.6, albeit down from the heady 58.1 recorded in July. House building remained the best performing category (60.7) with a slower performance recorded in commercial work (52.5) and civil engineering (46.6). Companies reported an improvement in business expectations for the year ahead, largely on the back of major infrastructure projects and public sector construction spending.
So what's the problem? At this stage in the recovery, businesses remain uncertain about the strength of the recovery and the probable increase in job losses. Duncan Brock, Group Director CIPS explained ...
"the manufacturing sector may be experiencing a 'V" shaped recovery. However, amidst the positivity, the elephant in the room remains the poor employment numbers."
This week job losses and store closures were announced by Pret and Costa. Job gains were revealed by Amazon and Tesco. Further pressure will be placed on the Chancellor, to extend the furlough scheme into the New Year, especially for those sectors slow to recover as we have long explained.
Then of course, there remains, the delicate issue of Brexit ... Duncan Brock continued " Companies are looking at how to stay in business for the rest of the year as challenges from the pandemic retreat a little only to be replaced by Brexit" ... ah yes Brexit, it's now over four years since the referendum ...
The Saturday Economist
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