Encouraging figures from today’s UK PMI prints with the latest numbers showing the private sector returned to growth in February.
At 53.0 in February, the headline seasonally adjusted S&P Global / CIPS Flash UK Composite Output Index registered above the 50.0 no-change value for the first time since July 2022. It was also a sharp improvement on January’s reading of 48.5.
The Flash UK manufacturing PMI at 49.2 (January: 47.0) hit a seven-month high while the flash UK Services PMI business activity index reached 53.3, up from 48.7 in January, an eight-month high.
The figures beat City expectations across the board.
????????#PMI data signalled that the #UK private sector climbed back into growth territory in February (Feb: 53.0; Jan: 48.5). The rebound was achieved across both sectors and accompanied by a further cooling in inflationary pressures. Read more: https://t.co/Gb8jPPrB7I pic.twitter.com/NIOwvbbOgS
— S&P Global PMI™ (@SPGlobalPMI) February 21, 2023
Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown suggested, ‘’The risks of a seventies style recession is receding as quickly as the hairlines of those born in the decade.”
She said the survey bucked “gloomy forecasts,” with the services sector in particular “powering ahead, with confidence snapping back as companies navigated past peak inflation and customers prove resilient amid the pain of high prices.”
“Relief that the market turmoil prompted by the disastrous mini-budget had been calmed is shining through in this data,” she added.
The report showed that UK private sector firms signalled a solid rebound in business activity during February, which ended a six-month period of falling output.
Both the manufacturing and service sectors achieved a return to growth, with the latter posting the faster rate of expansion.
Survey respondents cited rising customer demand and improving business confidence in February, due to lower economic uncertainty, fewer supply shortages and falling inflation.
February data pointed to the slowest overall increase in average cost burdens since April 2021, S&P said.
That said, prices charged inflation eased only fractionally, especially in the service economy. Many firms commented on the need to pass on higher wages, food costs and energy bills.
Commenting on the flash PMI data, Chris Williamson, chief business economist at S&P Global Market Intelligence said, “Much better than anticipated PMI data for February indicate encouraging resilience of the economy in the face of headwinds which include rising interest rates, the ongoing cost of living crisis, labour shortages and strikes.”
“While many companies continue to report tough operating conditions, especially in the manufacturing sector, the broader business mood has been buoyed by signs of inflation peaking, supply chains improving and recession risks easing. The stress created by last autumn's mini budget is also continuing to work its way out of the financial system.”