Despite a minor slowdown in service activity last month, the UK’s economy is on the verge of emerging from recession, Reuters reported on Thursday, citing a PMI survey.
The S&P Global Composite Purchasing Managers’ Index, which monitors both private-sector services and manufacturing firms, fell marginally to 52.8 in March from 53.0 in February.
However, this figure remains above the crucial 50 mark, indicating growth for the fifth consecutive month.
Tim Moore, economics director at S&P Global, highlighted the robust growth rate in March, attributing it to a resurgence in the service sector that is aiding the UK’s recovery from last year’s mild recession.
“Business activity has now expanded for five consecutive months, supported by sustained improvements in new order intakes. The solid growth rate achieved in March reinforces the view that a rebound in service sector performance is helping the UK economy to pull out of last year’s shallow recession.” Moore noted.
Despite strong inflation and high borrowing costs, businesses and consumers are spending more, he noted. The official data for the first quarter’s gross domestic product is due on May 10.
March’s service activity growth was slightly weaker than initially estimated, revised down to a four-month low of 53.1 from 53.4.
However, this was largely offset by an upward revision of the manufacturing index to 50.3 from 49.9, marking its first time above 50 in nearly two years.
Inflation news was mixed for the Bank of England, with economists predicting a rate cut in June or August.
While service businesses raised prices at the slowest rate in six months, it was still faster than their historical trend, contributing to persistent domestic inflation.
Despite high wage growth and a nearly 10 per cent increase in Britain’s minimum wage on April 1, firms were able to maintain control over hiring.
