The UK Flash Purchasing Managers’ Index (PMI) data highlighted that the manufacturing and services industries are at an eight-month high as the sectors bounce back from disruptions caused by Omicron.
Data compiled by IHS Markit for the Chartered Institute of Purchasing & Supply (CIPS) revealed private sector business activity has grown for 12 months in a row, with the Flash UK Composite Output Index registering at 60.2, up from 54.2 in January.
A reading above 50 indicates an expansion in activity.
Output growth in the service economy, indexed at 60.8, exceeded that in manufacturing, indexed at 56.7, although both industries experienced expansion since January.
Duncan Brock, group director at CIPS said, “Steering the course to increased business activity for the twelfth month in a row was largely attributed to the number of holidays and hospitality bookings as national lockdowns became a thing of the past and consumer confidence returned.”
The data showed that production volumes were helped by an improving market, with raw material shortages on the decline and global supply chains easing.
However, severe inflationary pressures persisted in February, with higher wages, through the roof energy bills and raw materials all contributing to a growing operating expenses bill.
IHS Markit noted that the overall rate of input cost inflation was at its second-highest since the index began over 24 years ago.
Chris Williamson, the chief business economist at IHS Markit said, “With the PMI’s gauge of output growth accelerating markedly in February and cost pressures intensifying to the second-highest on record, the odds of an increasingly aggressive policy tightening have shortened, with a third back-to-back rate rise looking increasingly inevitable in March.”
However, Martin Beck, chief economic advisor to the EY ITEM Club believes weaker times for PMIs are just around the corner.
“The drag on activity from elevated inflation, combined with April’s forthcoming rises in energy bills and taxes, point to a weaker period for the PMIs and the economy ahead,” Beck said.