UK private sector returns to growth

The S&P Global CIPS flash PMI composite output index rose to 53.0 from 48.5 in January, hitting an eight-month high and coming in above the 50.0 mark that separates contraction from expansion for the first time since July 2022. Economists had forecast a reading of 49.0.

The flash services PMI business activity index came in at 53.3 in February, up from 48.7 the month before and also an eight-month high. Economists had been expecting a reading of 49.2.

Meanwhile, the manufacturing PMI pushed up to 49.2 from 47.0, hitting a seven-month high and above expectations of 47.5.

Survey respondents cited rising customer demand and improving business confidence in February, due to lower economic uncertainty, fewer supply shortages and falling inflation.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said: "Much better than anticipated PMI data for February indicate encouraging resilience of the economy in the face of headwinds which include rising interest rates, the ongoing cost of living crisis, labour shortages and strikes.

"While many companies continue to report tough operating conditions, especially in the manufacturing sector, the broader business mood has been buoyed by signs of inflation peaking, supply chains improving and recession risks easing. The stress created by last autumn's mini budget is also continuing to work its way out of the financial system.

"However, while the data suggest that near-term recession odds have fallen considerably, elevated inflation pressures clearly remain a concern, especially in the service sector. As such, the resilience of the economy and the stickiness of the survey's inflation gauges add to the likelihood of the Bank of England tightening policy further, and potentially more aggressively, which may dampen future growth expectations and suggests that the possibility of recession later in the year should not be ruled out."