By Ian McConnell

THE UK private-sector economy has grown this month at the fastest rate for five years with the easing of lockdown measures implemented to slow the spread of coronavirus having boosted manufacturing and services activity, but job cuts have accelerated.

The flash composite output index, published yesterday by the Chartered Institute of Procurement and Supply and IHS Markit, has risen to a 61-month high of 57.1 this month on a seasonally adjusted basis. The final reading for June was 47.7.

The 50 mark is deemed to separate expansion from contraction, with the latest reading for the composite output index the first to be in expansionary territory since February.

For the UK manufacturing sector, the flash output index has climbed to a 32-month high of 59.8 this month. The final reading for June was 50.7.

The flash UK services business activity index has risen to a 60-month high of 56.6 this month, from 47.1 in June.

Highlighting job losses, CIPS and IHS Markit said: “Employment numbers continued to fall sharply, with the rate of job-shedding accelerating since the previous month. Lower staffing levels were typically linked to redundancies in response to subdued workloads and higher operating costs.”

Chris Williamson, chief business economist at IHS Markit, said: “The UK economy started the third quarter on a strong footing as business continued to reopen doors after the Covid-19 lockdown. The surge in business activity in July will fuel expectations that the economy will return to growth in the third quarter after having suffered the sharpest contraction in modern history during the second quarter.

“However, while the recession looks to have been brief, the scars are likely to be deep. Even with the July rebound there’s a long way to go before the output lost to the pandemic is regained and, while businesses grew more optimistic about the year ahead, a V-shaped recovery is by no means assured.”