“Mild recession”: United Kingdom economy shrinks at fastest rate since 2009

The employment index in the service industry witnessed contraction for the first time in four months.

Markit’s sister survey for manufacturing, released on Monday, showed growth in that sector grew at its slowest rate for 1 1/2 years.

Cips chief executive David Noble said the prospect of more global orders following the collapse in the pound would “be scant consolation if this Brexit hangover lasts much longer”.

With growth of manufacturing production also quickening, the seasonally adjusted Nikkei India Composite PMI Output Index climbed to a three- month high of 52.4 in July (June: 51.1).

He also backed the MPC to loosen policy, but cautioned: “While the PMI survey has successfully flagged all of the recent downturns, it has also provided false signals of recession, most notably in 1998 and 2001”.

The findings come a month after Markit/CIPS warned the Brexit vote could wipe out any export gains manufacturers were making in Europe.

Business sentiment has been hard to pin down since the United Kingdom voted to leave the European Union.

Chris Williamson, chief economist at IHS Markit, said: “The marked service sector downturn follows news from sister PMI surveys showing construction activity suffering its steepest decline since mid- 2009 and manufacturing output contracting at the fastest rate since late-2012”. The French PMI is seen at 50.3 and the Germany’s PMI at 54.6, both unchanged from preliminary estimates.

A score below the 50.0 baseline suggests contraction and above 50.0 points to growth. The growth was centred in the sectors of post and telecommunication and financial intermediation categories, while there was decline in expansion hotels and restaurants, renting and business activities and transport and storage firms. “The outlook for an immediate United Kingdom recession will become clearer with the release of more figures over the next two to three months, and as it emerges what policy interventions are being undertaken by bodies such as the Bank of England’s Monetary Policy Committee”.

Construction was not included in the original flash estimate of economic conditions in the aftermath of Brexit, but the all-sector PMI fell from 51.9 in June to 47.3 in July, its lowest level since the economy was in recession in April 2009.

The level is still 0.3% higher than June 2015, and construction spending in the first half of 2016 is 6.2% better than it was during the first six months of previous year.