By David Milliken
LONDON (Reuters) - Britain's economy proved more resilient than initially thought last month, despite a tightening of lockdown restrictions and an end to a temporary government subsidy for businesses such as restaurants and bars, a major survey showed on Monday.
The IHS Markit/CIPS Purchasing Managers' Index (PMI) for the services sector - which does not cover retailers - dropped to 56.1 in September from August's five-year high of 58.8, but the decline was smaller than an initial "flash" estimate of 55.1.
Readings above 50 indicate that a majority of businesses reported growth in activity.
The composite PMI, which includes manufacturing data released last week, fell to 56.5 from August's six-year high of 59.1, again a smaller drop than first reported.
"The UK service sector showed encouraging resilience in September, with business activity continuing to grow solidly despite the government's 'Eat Out to Help Out' scheme being withdrawn," IHS Markit economist Chris Williamson said.
"Many other consumer services activities showed a similar slide back into contraction as renewed lockdown measures were introduced," he added.
The PMI data painted a more upbeat picture than most other business surveys.
The British Chambers of Commerce said on Thursday that many more firms reported falls in sales during the third quarter than saw an increase, and said its data did not point to a sharp, 'V'-shaped recovery. [nL8N2GS5KG]
Britain's economy shrank by a record 20% in the second quarter when lockdown measures were tightest, and performed worse than any other major advanced economy in the first half of the year. [nL8N2GR3AE]
However there has been a fairly rapid - though uneven - recovery and economists polled by Reuters forecast on average that August gross domestic product data, due on Friday, will show output was around 7% below its year-ago level.
Last week the Bank of England's chief economist, Andy Haldane, said he expected output in September to be just 3-4% below year-ago levels, and said many commentators had underestimated the strength of the rebound. [nL8N2GR2P3]
Nonetheless, a sharp rise in COVID cases in Britain in September - following similar surges in France and Spain - has led to new restrictions on socialising at home or outside, though schools and workplaces remain open.
IHS Markit said confidence about the future remained positive, but was its weakest since May in both the services and the composite data.
Businesses also cut jobs for a seventh month in a row in September - the longest run since 2010. The reductions, though, were at the slowest pace since March despite the imminent end of a government job support programme this month.