LONDON (Reuters) – Britain’s economy looks set to have grown in early 2023 after firms in the dominant service sector in March reported the strongest new business expansion in a year and the best export performance since at least 2014, an industry survey showed.
Adding to signs of recovery in the economy, Wednesday’s final reading of the S&P Global/CIPS UK Services Purchasing Managers’ Index (PMI) of 52.9 was below February’s 53.5 but above the 50 mark denoting growth for a second month in a row.
It was also a touch higher than a preliminary March reading of 52.8 and contrasted with a more downbeat picture for the smaller manufacturing sector last month.
“March data confirmed that the UK service sector returned to growth during the first quarter of 2023, supported by a sustained rebound in new orders as business and consumer confidence improved from the lows seen last autumn,” Tim Moore, economics director at S&P Global Market Intelligence, said.
Britain’s economy has recovered after the “mini-budget” crisis triggered by former Prime Minister Liz Truss’s unfunded tax cut plans, which caused borrowing costs in financial markets to surge and hit confidence among consumers and businesses.
The PMI showed business expectations improved for a fifth straight month and optimism about business prospects was the highest since March last year.
However, some companies were worried about the rise in interest rates by the Bank of England and finance minister Jeremy Hunt’s corporate tax hikes.
The jump in new business was linked to improved confidence among consumers, while the increase in export sales – which was the strongest since at least 2014 when the data series began – had been helped by a strong recovery in business travel.
S&P Global’s input price index showed growth in costs was the slowest since May 2021. Although still high by historical standards, that represented welcome news for the BoE which is worried about the persistence of the recent surge in inflation.
(Reporting by William Schomberg; Editing by Hugh Lawson)
