Britain’s service providers reported a strong rebound in business conditions during March, with activity, new orders and employment all picking up since the previous month, according to a joint report released here Wednesday.
The purchasing managers’ index (PMI) for the service sector rose to 56.3 in March, up sharply from 49.5 in February, signalling the fastest rate of output expansion for seven months, said the report following a joint survey by IHS Markit, a London-based global information provider, and the Chartered Institute of Procurement & Supply (CIPS), which serves the procurement and supply profession.
Rising levels of activity were linked to a recovery in business and consumer spending, while some parts of the service economy commented on a boost from higher residential property transactions during March, said the report.
“The dominant service sector moved up several gears into growth with a strong leap in overall output, topped off with a rise in job creation for the first time since the pandemic began at the beginning of 2020,” said Duncan Brock, group director at the CIPS, a Britain-based global procurement and supply organisation.
Tim Moore, economics director at IHS Markit, said, “UK service providers were back in expansion mode in March as confidence in the roadmap for easing lockdown restrictions provided a strong uplift to new orders.”
Meanwhile, the Composite Output Index, a weighted average of the Manufacturing Output Index and the Services Business Activity Index, bounced to 56.4 in March, up from 49.6 in February, above the neutral 50.0 threshold for the first time in 2021 to date, figures showed.
British Prime Minister Boris Johnson on Monday confirmed that from April 12, non-essential shops will reopen and pubs and restaurants will reopen outdoors as Britain moves to step two of the roadmap out of the COVID-19 lockdown.
The forthcoming easing of government stringency measures also contributed to another improvement in business expectations for the year ahead, said the report.
Around 66 percent of the survey panel forecast an increase in activity over this period, while only 8 percent predict a fall. This signalled the strongest optimism since December 2006, said the report.
“Around two-thirds of the survey panel forecast an increase in output during the year ahead, which reflected signs of pent-up demand and a boost to growth projections from the successful UK vaccine rollout,” said Moore.
In addition, strong cost pressures continued in March, led by a rapid rise in purchasing prices across the manufacturing sector, the survey revealed.
“There were further signs that strong cost pressures have spilled over from manufacturers to the service economy, especially for imported items,” said Moore.
Moore added that higher prices paid for raw materials, alongside rising transport costs and utility bills, meant that “operating expenses across the service sector increased at the strongest rate since June 2018”.
On Feb. 22, Johnson announced his roadmap exiting the lockdown, the third of its kind since the start of the pandemic in the country. The four-step plan is expected to see all legal restrictions in England being removed by mid-June.
Experts have warned that despite progress in vaccine rollout, Britain is “still not out of the woods” amid concerns over new variants and the third wave of pandemic on the European continent.
To bring life back to normal, countries such as Britain, China, Russia, the United States as well as the European Union have been racing against time to roll out coronavirus vaccines.