finance

UK recovery accelerates with growth at a six-month high



Business output across numerous sectors in the UK has grown to a six month high in March, which last happened as the country faced a second lockdown in September last year.

Bank of Scotland ’s UK recovery tracker showed that output of 11 of the 14 UK sectors its monitors rose last month – up from six in February.

Manufacturers of technology equipment were at 69.7 while metals and mining products reported at 64.3 and transport operators were 62.8.

A reading above 50 signals output is rising, while a reading below 50 indicates output is decreasing.

The manufacturing of technology equipment recorded the strongest output growth for the second month in a row as international demand for components increased at the fastest pace for more than seven years.

The global demand for British technology helped firms outperform services businesses for a thirteenth consecutive month. However, the gap between them narrowed as more UK services sectors recorded growth in March.

The best-performing services sector in March was transport, with output rising at its fastest rate since January 2017, after contracting sharply this January, at 31.5.

Companies believed the rebound was due to bookings for domestic travel ahead of easing as well as increase for overseas travel.

The output of UK software services was 56.6 and industrial services was at 60.5. It rose for the second consecutive month, with providers citing a rise in corporate spending on solutions that support both continued remote working and the reopening of offices in markets.

The rise in sectors registering output growth pushed the pace of the UK’s economic recovery ahead of the global benchmark for the first time in six months during March.

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The tracker reported that 10 of the 14 sectors were ahead of their global peers, up from just two in February.

Meanwhile, 12 of the 14 sectors reported an increase in job creation during March as lockdown restrictions eased – the highest number since July 2018.

Tourism, recreation, food and drink were the only sectors to report a fall in employment during March, with many firms yet to boost staff numbers ahead of the full reopening of UK hospitality in May.

Food and drink producers saw a decline in new business from abroad for the third month running in March, with the downturn contrasting with a strong recovery elsewhere in Europe.

Six of the seven manufacturing sectors monitored by the tracker still recorded output growth, with the output of three sectors returning to growth after contracting in February.

Metals and mining were up to 64.3 in March vs 45.5 in February, chemicals were up to 58.5 in March vs 45.4 in February and household products were up to 62.1 in March vs 46.8 in February.

The automotive industry was the only UK manufacturing sector to register a decrease in output during March, with many firms experiencing parts shortages and some overseas customers choosing to buy from EU suppliers.

Overall UK manufacturing exports rose month-on-month, with only technology equipment manufacturers outperforming their European peers on new export orders during March.

Jeavon Lolay, head of economics and market insight at Lloyds Bank Commercial Banking, said: “The UK’s recovery is clearly accelerating, as the economy continues to open up after a tough lockdown and optimism builds.”

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Scott Barton, managing director for corporate and institutional coverage at Lloyds Bank Commercial Banking, added: “Business activity is clearly more upbeat than expected and offers confidence for a sharp upturn ahead.

“The situation will be a considerable relief, especially for the hardest hit sectors of the economy which hopefully stand to play a leading role in the recovery – he fact that the majority of sectors reported increased hiring is another very promising sign for the outlook.”

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