Latest data released by Markit/CIPS – 24 march 2021
That is a solid beat and adds to the optimism surrounding the rebound in the UK economy once restrictions are eased later on in the year.
Business activity in the UK returned to expansion and improved at its quickest pace in seven months, with the services reading also coming in at the highest since August last year. Meanwhile, the manufacturing reading is the highest in 40 months.
Service providers noted forward bookings from domestic consumers as the higher level of activity is linked to the prospect of looser restrictions later in the year.
“The UK economy rebounded from two months of decline
in March, with business activity growing at its fastest rate
since last August as children returned to schools, businesses
prepared for the reopening of the economy and the vaccine
roll-out boosted confidence. Companies reported an influx
of new orders on a scale exceeded only once in almost four
years, and business expectations for growth in the year
ahead surged to the highest since comparable data were first
available in 2012. Employment consequently rose for the first
time since the pandemic struck as firms expanded capacity in
response to the new inflows of work and brighter outlook.
“The surge in business activity is far stronger than any
economists expected, according to Reuters polls, and hints
at only a modest contraction of GDP during the first quarter,
adding to evidence that the economy has shown far greater
resilience in the third lockdown compared to the first. The
encouraging readings on future expectations, job creation
and new order inflows meanwhile all point to robust economic
growth in the second quarter, especially if virus restrictions
are lifted further.
“Worries persist though, especially in relation to near-record
supply chain delays, a continued fall in exports and sharply
rising prices, all of which are making life difficult for many
companies. Many consumer facing companies meanwhile
remain constrained by COVID-19 restrictions, which are likely
to curb the overall pace of economic growth for some time to
come, especially if we see a third wave of infections.”