By Andy Bruce
LONDON, Feb 21 (Reuters) - British businesses reported
an unexpected bounce in activity this month as well as receding
price pressures, according to a survey on Tuesday that suggested
the economy may be sidestepping the risk of recession.
The preliminary "flash" reading of the S&P Global/CIPS UK
Composite Purchasing Managers' Index (PMI) jumped to 53.0 in
February from 48.5 in January, above the 50 threshold for growth
for the first time since July.
It surpassed all forecasts in a Reuters poll of more than 20
economists, which had pointed to a reading of 49.0.
The dominant services sector drove the improved reading,
which financial data company S&P Global put down to recovering
global demand and stability since the market turmoil associated
with the brief premiership of Liz Truss.
Crucially for the Bank of England as it weighs another
interest rate hike, the PMI's price indexes - a good guide of
future inflation pressure - continued to fall, with businesses'
costs rising at the slowest pace since April 2021.
The survey suggested that Britain's economy may be in
slightly better shape than many forecasters had predicted,
although similar unexpected strong readings in the past have
sometimes turned out to be blips.
"Much better than anticipated PMI data for February indicate
encouraging resilience of the economy," said S&P Global Chief
Business Economist Chris Williamson.
"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."
Williamson added that the survey data boosted the likelihood
of a BoE rate hike next month, something which most economists
polled by Reuters already expect.
The PMI for the services sector rose to 53.3 in February
from January's 48.7, the highest reading since June last year.
Factory activity continued to contract but at a much reduced
pace, with the manufacturing PMI increasing to 49.2 from 47.0,
close to 50, the no-change mark.
Both the services and manufacturing surveys showed growing
numbers of companies became more optimistic about their
prospects in February.
(Reporting by Andy Bruce; Editing by Susan Fenton)
Messaging: @brucereuters))
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