Services sector reports record surge as lockdown eases

The UK economy rebounded in June, industry research showed on Monday, as lockdown measures started to ease and the services sector enjoyed a surge in activity.

The BDO Services Output Index for June rose by 11.20 points from May to 64.73, the largest monthly increase on record, after non-essential businesses were allowed to reopen from 15 June.

The increase mirrored ongoing improvements in the Manufacturing Output Index, which reported a spike in May when a number of lockdown measures specific to the sector were first eased. That momentum continued in June, with the index rising to 80.47 from 69.55, and meant the overall UK Output Index jumped 11.16 points to 66.50.

However, the Output Index remains well below the 95 level that represents positive growth and is also significantly below the trough seen during the 2008/09 financial crisis, of 79.28.

Kaley Crossthwaite, BDO partner, said: "Although economic activity remains considerably suppressed, the recovery in output is an encouraging signal that the easing of restrictions has breathed life into certain sectors.

"While output continues to show positive momentum, the crucial infrastructure underpinning the economy remains fragile. As government support measures are rolled back in the coming months, the prospects for the economy will become clearer."

The Optimism and Inflation Indices reported marginal increases, with the former rising 4.57 points month-on-month to 79.59, and the latter largely flat, at 88.06 compared to 87.65 in May. The Employment Index eased to 106.24 from 108.11.

The BDO monthly business trends indices, which are compiled for the accountancy firm by the Centre for Economics and Business Research, weight macroeconomic data from the UK’s main business surveys. The Services Output Index covers a range of industries, including retail, hospitality, transport and professional services.