UK economy shows signs of recovery despite inflation: S&P Global

25 Apr '23

2 min read

UK economy shows signs of recovery despite inflation: S&P Global

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UK private sector firms signalled a rise in business activity for the third consecutive month during April and the rate of expansion accelerated to its fastest for a year, according to S&P Global.
Despite a further robust rise in new order intakes, manufacturing production fell in the month.
UK manufacturing supply chains continued to improve during April.

UK private sector firms signalled a rise in business activity for the third consecutive month during April and the rate of expansion accelerated to its fastest for a year, according to S&P Global. A further robust rise in new order intakes added to signs of an improving economic landscape.

However, there were divergent trends by sector as strong growth in the service economy contrasted with another fall in manufacturing production.

Goods producers noted that customer destocking and efforts to cut costs had added to downward pressure on demand, whereas service providers typically commented on resilient consumer spending, S&P Global said in a release.

April data pointed to the slowest increase in input costs at private sector companies for just over two years, due to lower fuel and energy prices as well as improving supply conditions.

At 53.9 in April, the headline seasonally adjusted S&P Global-CIPS flash UK composite output index was up from 52.2 in March and above the crucial 50 no-change threshold for the third month running. Moreover, the latest index reading signalled the strongest rate of output growth since April 2022.

Manufacturing production (index at 48.5) decreased for the second month running and at the fastest pace since January.

Manufacturers attributed a renewed fall in new work to customer destocking, elevated energy costs and subdued demand for big ticket consumer goods.

Similarly, export sales increased at a solid pace across the service sector, but manufacturers experienced a decline for the fifteenth consecutive month.

Manufacturing supply chains continued to improve during April, with the respective index little-changed from the survey-record upturn seen in March.

UK suppliers’ delivery times have now shortened for three months running, with goods producers often citing improved raw material availability and lower demand. However, survey respondents noted ongoing difficulties with sourcing electrical items amid supply constraints across Asia.

Fewer concerns about vendor performance, combined with subdued order books, meant that UK manufacturers unwound their safety stocks where possible in April. This was signalled by the fastest fall in pre-production inventories since May 2020.

Fibre2Fashion News Desk (DS)

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