UK business activity stabilises in February
By Michele Maatouk
Date: Friday 19 Feb 2021
(Sharecast News) - Business activity in the UK stabilised in February following a collapse at the start of the year, according to a flash reading released on Friday.
The IHS/Markit CIPS flash UK composite purchasing managers' index - which measures activity in both the manufacturing and services sectors - came in at 49.8 from 41.2 in January, hitting a two-month high.
A reading below 50.0 indicates contraction, while a reading above signals expansion.
The manufacturing PMI fell to a nine-month low of 50.5 in February from 50.7 in January, while the index for the services sector printed at a four-month high of 49.7, compared to 39.5 the month before.
Chris Williamson, chief business economist at IHS Markit, said: "The UK economy showed welcome signs of steadying in February after the severe slump seen in January, albeit with business activity remaining sharply lower than late-last year due mainly to the ongoing national lockdown.
"Although the hospitality sector, including hotels and restaurants, reported a further steep decline, as did the transport and travel sector, rates of contraction eased considerably. Business and financial services companies meanwhile recovered to register modest expansions, helping the hard-hit service sector to come close to stabilising.
"In contrast, the manufacturing sector's performance worsened amid escalating Brexit-related export losses and supply chain disruptions. More than half of all companies reporting lower exports attributed to the decline to Brexit-related factors. Brexit was also the most commonly cited cause of supply delays."
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the swift recovery in the composite PMI in February suggests that businesses are continuing to adapt to lockdown conditions and that GDP probably will recover a bit after January's sharp fall, even though lockdown rules haven't been relaxed.
"Admittedly, the composite PMI technically is an indicator of month-to-month growth in business activity. But many firms don't fill in the survey properly, and simply provide their general sense as to whether conditions are good or bad.
"This means that the PMI tends to understate the initial recovery after a large fall in demand. Note that the composite PMI printed at 47.7 in June, when GDP leapt by 9.1% month-to-month. We're still penciling in a 1.0% month-to-month rise in GDP in February, after a 4.5% drop in January, which would leave it on course for a 3% quarter-on-quarter drop in Q1."
Email this article to a friend
or share it with one of these popular networks:
You are here: news
10 Lower Thames St,
London EC3R 6EN