UK private sector output expanded in February, according to the latest data from S&P Global reported.
The Flash UK PMI Composite Output Index rose to 53.9, up from 53.7 in January, marking a 22-month high. Manufacturing output strengthened to 53.6 from 51.6 in January, a 17-month high. Services output eased slightly to 53.9 from 54.0, a 2-month low.
New orders increased for the third month in a row. Manufacturers saw the fastest rise in export orders in four-and-a-half years. Service sector export growth was more modest.
Employment declined for the 17th consecutive month. The service sector recorded particularly steep job losses. Companies cited redundancies, hiring freezes, and investments in technology to maintain output without additional staff.
Input costs remained elevated, although inflation eased to a three-month low. Output price inflation accelerated, particularly in services, reflecting higher wages and supplier prices.
“The early PMI data for February bring further signs of an encouraging start to the year for the UK economy," commented Chris Williamson, chief business economist at S&P Global Market Intelligence.
"A solid rise in output across manufacturing and services has been reported in both January and February, with the rate of expansion gaining pace.
"The survey data so far this year are consistent with GDP rising by just over 0.3% in the first quarter if this performance is sustained into March."
Williamson noted that the upturn continues to be led by the service sector, but there are signs that manufacturing is regaining momentum to join in the recovery, reporting a surge in export orders of a magnitude not seen since the pandemic.
"Despite enjoying higher demand for goods and services, companies remain focused on boosting productivity to cut costs, resulting in yet another month of steep job losses to prolong the continual jobs downturn that was initiated by the 2024 autumn Budget," he added.
Higher staffing costs, often attributed to Budget policy changes, meant service sector inflation remained elevated. However, increased competition, especially in the manufacturing sector, is helping keep a lid on inflationary pressures.
"Bank of England policymakers will be encouraged by the indications of stronger economic growth, but the relatively modest price pressures being signalled and ongoing worrying labour market weakness will likely result in a growing call for further rate cuts,” Williamson said.