Business activity in the UK private sector returned to growth in March, fuelled by a rebound in the UK’s dominant services sector.
The services PMI reading jumped into positive territory, from 49.5 to 56.8, much better than expectations of 51.0
The positive figures were fuelled by a rise in new orders for the first time since September as sales were boosted by the upcoming easing of lockdown measures, rising consumer confidence and higher demand for residential property services.
The headline seasonally adjusted IHS Markit/CIPS Flash UK Composite Output Index registered 56.6 in March, up sharply from 49.6 in February and above the crucial 50.0 mark — which indicates growth — for the first time in three months.
The latest reading marks strong growth in March and the fastest speed of recovery since August 2020.
It is also the first time that service sector activity outpaced manufacturing since the start of the pandemic.
The figures reflect increased confidence about the UK’s recovery from a 10 per cent slump in GDP last year — the biggest fall in more than 300 years.
This has been spurred on by both the lockdown exit roadmap and the successful rollout of coronavirus vaccines.
“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,” said Chris Williamson, chief business economist at IHS Markit.
“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.”