Economy bounces back as lockdown eases

Linda J. Dodson

Confidence among private sector firms hit a four-month high although respondents reported lingering caution among clients dragging down overall demand, threatening hopes for a V-shaped recovery.

Chris Williamson at survey compiler IHS Markit said: “While confidence is rising that the economy will soon return to growth as the lockdown continues to ease, the longer-term recovery prospects remain highly uncertain. Some of the recent gains in the survey reflect short-term bounces as businesses returned to work, but demand clearly remains weak.”

The Bank of England pumped an extra £100bn into the economy through its quantitative easing scheme last week, with the latest survey offering supporting evidence for its upbeat assessment of the recovery from the shutdown so far. 

However, the CIPS survey also showed companies nervous over hiring, and another “rapid, albeit slower, drop in total staffing levels” ahead of the reining in of the Government’s furlough scheme supporting more than nine million jobs.

Duncan Brock at CIPS said: “Services remained weakened and still in contraction and there are deep concerns about how the end of furlough support will affect employment levels in the next few months.”

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