According to the report from IHS Markit / CIPS, business activity across the UK private sector increased in March and the rate of expansion was the fastest for seven months. This was fuelled by a rise in new orders for the first time since September 2020, which survey respondents attributed to a rebound in sales ahead of easing lockdown measures, alongside stronger consumer confidence and a surge in demand for residential property services.
The headline seasonally adjusted Flash UK Composite Output Index registered 56.6 in March, up sharply from 49.6 in February and above the crucial 50.0 no-change mark for the first time in three months. The latest reading signalled a strong rate of private sector output growth and the speed of recovery was the fastest since August 2020. For the first time since the start of the pandemic, service sector activity (index at 56.8) outpaced manufacturing production growth (55.6).
Higher levels of business activity were often linked to the prospect of looser restrictions on trade due to the coronavirus disease 2019 (COVID-19) pandemic. Moreover, the government roadmap for fewer stringency measures in the coming months contributed to the strongest rise in total new work since August 2020. Service providers noted forward bookings from domestic consumers, while some manufacturers cited advanced orders from hospitality businesses and high-street retailers. Export sales remained relatively subdued, however, with total new orders from abroad falling for the third month running. A strong degree of pent-up domestic demand led to a renewed increase in unfinished work in March. Although only modest, the rate of backlog accumulation was the fastest since June 2018.
Latest data indicated that expectations for the year ahead picked up for the third month running and were the strongest since this index began in July 2012.
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