Breaking News
Get 40% Off 0
🔎 See NVDA's full ProTips for an instant risks or rewards Claim 40% OFF

UK economy shows signs of recovery despite inflation's drag

Published Apr 21, 2023 06:10AM ET Updated Apr 21, 2023 06:18AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: The City of London financial district can be seen as people walk along the south side of the River Thames, amid the coronavirus disease (COVID-19) outbreak in London, Britain, March 19, 2021. REUTERS/Henry Nicholls
 
SPGI
-0.39%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Suban Abdulla and William Schomberg

LONDON (Reuters) -British businesses reported their busiest month in a year and consumers turned more confident, according to surveys published on Friday that added to signs of a recovery in the economy that has so far defied forecasts of a recession.

The preliminary reading of the S&P Global/CIPS UK Composite Purchasing Mangers' Index (PMI) also showed the slowest input cost inflation in over two years, but price pressures look strong enough for the Bank of England to raise rates again next month.

The PMI - spanning services and manufacturing firms - rose to 53.9 in April from 52.2 in March, putting it further above the 50 line denoting growth for the third consecutive month and representing the strongest growth since April last year.

Economists polled by Reuters had forecast a lower reading of 52.5.

"The key takeaway is that the economy as a whole is not only showing encouraging resilience but has gained growth momentum heading into the second quarter," Chris Williamson, chief business economist at S&P Global (NYSE:SPGI), said.

The PMI was driven by the services sector as consumer spending on travel, leisure and entertainment showed strength while manufacturing remained weak.

Williamson said the survey was consistent with quarterly gross domestic product growth of 0.4%.

Last month the BoE said it expected modest economic growth in the second quarter of 2023, though it still predicted a contraction in the first quarter.

It is widely expected to increase borrowing costs for the 12th meeting in a row in May as it continues to grapple with an inflation rate above 10%.

The International Monetary Fund this month predicted that Britain's economy would shrink by 0.3% in 2023, a less severe hit than its previous forecast but still the sharpest contraction among the world's big rich economies this year.

S&P Global's input price index - a good guide to future inflation pressures - showed the slowest growth in costs for firms since March 2021, although overall cost pressures remained high by historical standards.

There were also signs of recovery in Friday's consumer confidence survey by polling firm GfK which rose to its highest since February last year, albeit to weak levels.

Consumers' expectations for Britain's economy in the next 12 months hit a 15-month high and they rated the prospects for their finances as the best since February 2022.

"The brighter views on what the general economy has in store for us ... could even be seen as the proverbial 'green shoots of recovery'," Joe Staton, GfK's client strategy director, said.

There was a reminder of the problems facing many consumers in official retail sales data also published on Friday.

Sales volumes fell by a greater-than-expected 0.9% in March from February, but some of the weakness was attributed to rainy weather as well as the impact of high inflation.

Darren Morgan, director of economics at the Office for National Statistics, said the broader trend for retail sales was less subdued than the figures for March alone suggested.

"A strong performance from retailers in January and February means the three-month picture shows positive growth for the first time since August 2021," he said.

UK economy shows signs of recovery despite inflation's drag
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email