Recovering factories keep UK economy on track in February: PMIs

The UK economy extended a run of better-than-expected growth in February, more evidence of a rebound after fourth-quarter stagnation. While the expansion continued apace, there were also signs of a hit to supply chains from coronavirus, according to IHS Markit's flash purchasing managers index.

The virus's outbreak weighed on manufacturers’ input stocks, which fell at the fastest pace in more than seven years. Some orders from clients in Asia were canceled and extended shutdowns in China proved a headwind. Nevertheless, manufacturing output grew the fastest in 10 months, offsetting a small downward move in services. Growth expectations in the private sector edged up slightly, the report showed. The pound held gains after the report and traded at $1.2922 as of 9:31 am in London.

"The recent return to growth signaled by the manufacturing and services PMIs provides a clear indication that the UK economy is no longer flat on its back," said Tim Moore, an economist at IHS Markit. The expansion is running at a 0.2 per cent pace in the first quarter, he said. Firms noted that a reduction in political uncertainty since the December election translated into higher business activity and more spending by clients.