The latest Purchasing Managers' Index (PMI) figures have been released, revealing that the UK's private sector recorded its best performacne in nine months in February 2024.
This raised hopes that the economy's 'technical recession' may have already ended at the start of 2024, echoing comments from Andrew Bailey from the Bank of England earlier in the week.
Data compiled by S&P Global reported the fourth consecutive months of rising output. The index rose to 53.3 from 52.9. Any figure above 50 marks growth in the private sector, and this was better than the 53 expected by economists; it was also the highest since May last year.
S&P said that the services sector was still driving the UK's recovery after PMI figures had dipped below 50 in the second half of 2023.
Chris Williamson, Chief Business Economist at S&P said that this meant that the UK economy may have grown by 0.2% to 0.3% in Q1 2024.
Strong retail sales data from January suggested that shoppers had had their best spree on the high street in three years. Business confidence was also at its highest since February 2022, before someone decided to invade Ukraine. This is also caused by interest rates starting to fall, inflation is declining and demand from customers is up.
It's not all rosy though: factories have suffered delays in shipping and increases in costs from the Houthis' disruption in the Red Sea, leading to supply chain lead times being at their highest since 2022. Services firms also reported higher wage costs in February; they make up 75% of economic growth and 80% of employment in the UK.
Mr Williamson said "with growth accelerating and prices on the rise again, February’s data mean policymakers are increasingly likely to err on the side of caution when considering the appropriateness of cutting interest rates".
