Markit's flash UK PMI shows steepest contraction since early 2009

The latest data from Markit released on Friday showed the UK economy contracted at its steepest pace since early 2009 in July.

Markit’s flash UK composite purchasing managers’ index, which combines both the services and manufacturing sectors, fell to 47.7 in July from 52.4 in June. A reading below 50 indicates contraction.

The flash services PMI slid to 47.4 from 52.3 in June, missing expectations of 49.2 and marking the lowest reading since March 2009.

Meanwhile, the manufacturing PMI came in at 49.1 from 52.1 the month before, falling short of economists’ expectations for a reading of 50. This was the lowest level since February 2013.

Chris Williamson, chief economist at Markit, said: “July saw a dramatic deterioration in the economy, with business activity slumping at the fastest rate since the height of the global financial crisis in early-2009.

“The downturn, whether manifesting itself in order book cancellations, a lack of new orders or the postponement or halting of projects, was most commonly attributed in one way or another to ‘Brexit’.”

He said the survey signalled a 0.4% contraction of the economy in the third quarter, although much depends on whether we see a further deterioration in August or if July represents a “shock-induced nadir”.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “The collapse in the composite PMI to its lowest level since April 2009 provides the first major evidence that the UK is entering a sharp downturn.

“The confidence shock from the Leave vote might wear off over the coming months, but the decline in the new orders index to just 46.2, from 53.0 in June, points to even faster falls in output ahead.”