Britain’s private sector expanded at its fastest pace for seven years in August as the twin engines of the economy, the manufacturing and services sectors, surged back to life. But businesses, which have brought millions of workers back from furlough, warned that the rise in activity was not enough to prevent a “steep and accelerated” fall in employment. With the outlook remaining uncertain, they said many furloughed staff had little to do when they returned to work and faced losing their jobs. The increase in demand for services and manufactured goods, which followed the easing of the lockdown during the summer, sent the IHS Markit CIPS flash UK composite output index to 60.3 in August, up from 57 in July. A figure above 50 indicates expansion. A backlog of maintenance work after the shutdown in April accounted for much of the increase in business services while the restocking of depleted supplies and the return of car buying helped the UK’s manufacturing industry increase output. Treasury ministers are likely to cheer the bounceback in activity after deep divisions in cabinet over how fast to unlock the economy as Covid-19 cases began to fall. Rishi Sunak’s initiative to boost the restaurant trade with his “eat out to help out” subsidy is credited with encouraging consumers to leave home and shop on the high street. But the chancellor will be concerned that business confidence has fallen and the rate of jobs cuts has accelerated. IHS Markit also warned that businesses were still operating at levels well below those before to the pandemic. It said figures showing Britain was in the middle of a deep recession and the Treasury’s warning that many subsidies would end in October had sent business confidence tumbling. “Concerns about the speed and duration of the recovery resulted in sustained job cuts across the private sector during August,” it said. “In contrast to the positive trends for output and new orders, latest data indicated the fastest pace of decline in employment numbers since May. “Lower payroll numbers were primarily attributed to redundancy programmes in response to depleted volumes of work and the need to reduce overheads before the government’s job retention scheme winds down. A sustained decline in backlogs of work across the private sector economy also suggested that incoming new orders fell short of business capacity.” Some economists have argued that a dash for growth may only bring short-term gains if it is mishandled and forces the government to impose further lockdowns. There are already concerns that Birmingham will be forced into a lockdown in addition to the those already imposed across Greater Manchester and several other cities and regions in recent weeks. A warning as to how further lockdowns might adversely affect the economy was shown in a similar survey of the eurozone, which is considered to be two or three weeks ahead of the UK in tackling the coronavirus. Many countries have restricted shopping and other activities to bring down infection rates. The flash IHS Markit eurozone composite PMI posted 51.6 in August, down from July’s reading of 54.9, indicating a dramatic slowdown in the pace of output growth. In July the first expansion of activity in five months was recorded and a further rate of expansion was expected. However, the services sector flatlined, leaving only the eurozone manufacturing sector to expand in August.