- Composite PMI 53.1 vs 53.0 prelim
Output levels rise for first time in six months as new order growth hits a 9-month high, reaffirming a modest pick up in the UK economy in February. S&P Global notes that:
“UK service providers moved back into expansion mode in
February as fading recession fears and improving business
confidence resulted in the strongest rise in new orders since
May 2022. However, elevated borrowing costs and stretched
household finances remained constraints on growth.
“There was clear evidence that input price inflation has
peaked, with the latest increase in average cost burdens the
weakest since June 2021. Service sector firms commented
on lower fuel bills and transportation costs, alongside a
gradual easing of broader inflationary pressures due to
falling wholesale gas prices. However, many businesses
also noted historically strong wage inflation and sharply
rising food costs, especially those operating in the hotels
and restaurants sector.
“Tight labour market conditions and the need to alleviate
squeezed margins continued to limit the degree to which
falling cost pressures were passed on to end consumers.
The index measuring average prices charged by service
sector companies has fallen by just 0.2 points over the
past three months, compared to 5.9 points for input prices,
which adds to signs of sticky inflationary pressures.
“Service providers appear confident that demand remains
sufficiently resilient to pass on higher costs to clients. The
latest survey indicated that business activity expectations
rebounded to highest since March 2022, helped by reduced
political uncertainty, an improving global economic outlook,
and hopes that peak interest rates are on the horizon.”
