HomeBussinessUK's recession recovery continues as business activity grows, but inflation pressure too

UK’s recession recovery continues as business activity grows, but inflation pressure too


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British business continued to bounce back from last year’s technical recession in April, according to new data, as improved services offset a downturn in manufacturing.

The preliminary ‘flash’ purchasing managers’ index (PMI) output index for the UK from S&P Global showed business output expanded at the fastest pace in 11 months.

This indicates that UK gross domestic product (GDP) is rising at a quarterly rate of 0.4% compared to the 0.3% increase that is expected for the first quarter.

“Early PMI survey data for April indicate that the UK economy’s recovery from recession last year continued to gain momentum,” S&P economist Chris Williamson commented.

The index hit 54.0 in April, against March’s reading of 52.8, according to S&P, fuelled by an increase in services activity.

“Respondents typically commented on rising business and consumer spending” within the service sector, S&P said, “supported by a recovery in broader economic conditions”.

Manufacturing production declined over the period however, having notched up increases previously, with S&P attributing the fall to market conditions and destocking.

S&P also said private sector new business volumes increased, alongside employment, but noted input price inflation accelerated sharply.

“The upturn encouraged firms to take on workers in increased numbers which, alongside April’s rise in the National Living Wage, drove cost pressures sharply higher,” Williamson said.

“Although selling price inflation cooled slightly, the upturn in costs alongside solid demand suggests firms may seek to raise prices in the coming months.

“While the improving economic recovery picture is welcome news, the upward pressure on inflation will add to concerns that a sustainable path to below target inflation has not yet been achieved.”

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