Private sector output rose at the fastest pace in eight months, driven by a strong recovery in consumer spending on travel, leisure and entertainment.
Data from the UK’s Flash Purchasing Managers’ Index (PMI) highlighted that manufacturing and services industries are at their highest levels in eight months, with sectors rebounding from the disruption caused by Omicron.
Data compiled by IHS Markit for the Chartered Institute of Purchasing & Supply (CIPS) revealed private sector business activity rose for 12 consecutive months, with the Flash UK Composite Output Index coming in at 60.2, against 54.2 in January.
A reading above 50 indicates an expansion in activity.
Output growth in the services economy, pegged at 60.8, outpaced that of manufacturing, pegged at 56.7, although both industries have been expanding since January.
Duncan Brock, Group Director at CIPS, said: “The direction of increased business activity for the twelfth consecutive month has largely been attributed to the number of vacation and hospitality bookings as nationwide lockdowns have become a thing of the past. and consumer confidence has returned.
The data showed that production volumes were helped by an improving market, with shortages of raw materials easing and global supply chains loosening.
However, strong inflationary pressures persisted in February, with higher wages, through roof energy and raw material bills, all contributing to a rising operating expense bill.
IHS Markit noted that the overall rate of input cost inflation was at its second highest level since the index began more than 24 years ago.
Chris Williamson, chief economist at IHS Markit, said: “With the PMI output growth indicator accelerating markedly in February and cost pressures intensifying to the second highest level On record, the chances of increasingly aggressive policy tightening have diminished, with a third consecutive rate hike looking increasingly inevitable in March.
However, Martin Beck, chief economic adviser to the EY ITEM club, believes weaker times for the PMIs are just around the corner.
“The slowdown in activity due to high inflation, combined with upcoming increases in energy bills and taxes in April, points to a weaker period for PMIs and the economy ahead,” Beck said.