British businesses said economic activity accelerated at the fastest pace in a year this month, while input cost inflation slowed on falling fuel and energy prices, a closely watched survey showed. posted on friday.
The S&P/Cips global flash UK Purchasing Managers Composite Index, a measure of private sector activity, rose to 53.9 in April from 52.2 in March, beating the analyst consensus forecast of 52 ,5.
The latest reading marked the third straight month that the index has stayed above 50, indicating that most companies are reporting monthly expansion.
“The key takeaway is that the economy as a whole is not only showing encouraging resilience, but has gained growth momentum heading into the second quarter,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.
The survey coincides with other signs of economic recovery. Earlier on Friday, the GfK research group reported that its Consumer confidence indexa gauge of how Britons view their personal finances and the broader economic outlook, rose six points to -30 this month.
According to the PMI survey, conducted between April 12 and 19, the rebound in activity was driven by strong growth in the services sector, where the index rose to a 12-month high of 54.9 this month, from 52.9 in March. as consumers were more willing to spend on travel, leisure and entertainment.
“However, growth is unbalanced, with rising demand for services contrasting with a continued decline in demand for goods,” Williamson noted.
As more people opted to spend on vacations instead of big purchases, manufacturing activity fell for the second month in a row and at the fastest pace since January.
Reduced customer demand and falling export sales were some of the factors influencing performance, according to panel members.
Meanwhile, survey data showed that trade input costs, while still high, grew at their slowest pace in two years as lower fuel and power prices, as well as improving conditions of supply, relieved some of the pressures.
However, respondents widely reported that April marked another month of strong wages. inflationwhich contributed to an increase in the prices they charged.
On Wednesday, separate figures from the Office for National Statistics showed the UK’s annual rate of inflation was 10.1% in March, just down from 10.4% the previous month and still not far off its October peak of 11.1%.
“Preliminary PMIs for April suggest the economy continues to prove resilient to the double whammy of looming high inflation and high interest rates. [the second quarter of 2023]said Ashley Webb, UK economist at Capital Economics.
“That, together with evidence suggesting that domestic inflationary pressures are easing more slowly, gives us even more confidence in our view that the Bank of England will raise interest rates,” he added.
Analysts believe the central bank is likely to raise interest rates for the twelfth time in a row, beyond the current 4.25 percent, when the Monetary Policy Committee meets on May 11.