UK Firms Report Strongest Month Since May 2023: S&P PMI Survey

UK PMI Survey: UK companies experienced a robust month in February, reporting their strongest performance since May of the previous year, as indicated by the S&P Global composite Purchasing Managers Index (PMI) covering both services and manufacturing sectors. 

The index inched up to 53.0 from January's 52.9, suggesting a positive shift and potential emergence from a short-lived recession. Although the final PMI for the services sector alone dipped slightly to 53.8 from January's 54.3, it remained the second-highest reading since May 2023.

Tim Moore, Economics Director at S&P Global Market Intelligence, remarked on the solid expansion in business activity, signaling a turning point for the UK economy after facing a technical recession in the latter half of 2023. The survey highlighted optimistic signs, with service firms experiencing the fastest order book expansion since May of the previous year, fueled by client confidence in potential interest rate cuts by the Bank of England.

However, challenges loom on the horizon as the survey pointed to the fastest rise in input prices since August of the previous year. Prices charged by companies also increased at the joint-fastest rate since July of the previous year. 

These factors pose considerations for the Bank of England, which has hinted at the possibility of a rate cut but remains cautious due to persistent inflation pressures, particularly in terms of robust wage growth. The central bank seeks evidence that inflationary pressures are easing before making any significant moves.

With Reuter’s Inputs