UK PMI Points To Strengthening Global Economy

The global economy is tracking for a strong rebound, evidenced by increases in European and Asian manufacturing output and the demand for services, according to the latest Purchasing Managers’ Index, which is published monthly by IHS Markit.

The U.K. Manufacturing PMI was 60.7, up from 58.9 in March and the highest level since July 1994. The U.K. Services Business Activity PMI was 60.1, up from 56.3 in March. The biggest boost came from consumer services as restrictions eased for customer-facing services in England and Wales.

The Index is a survey-based measure in the manufacturing and services sectors. A figure above 50 denotes expansion in business activity, and anything below 50 denotes contraction.

Services activity growth outpaced manufacturing production for the first time since the start of the pandemic in England and Wales. Purchasing managers surveyed mostly credited the easing of lockdowns and increased numbers of people being vaccinated. 

The latest survey also shows the strongest overall increase in U.K. private-sector output since November 2013. Scotland and Northern Ireland are anticipated to follow a similar easing of service and non-essential retail lockdowns by the end of April.

Business services also showed momentum this month, which the survey indicates is a sign of rising confidence in the U.K.’s economic outlook. There were also advance reservations for hotels, restaurants and other consumer services, all following a pre-determined roadmap for reopening the economy. Overall new hirings were also at the highest level since March 2015.

“Although the service sector continued to be hard hit by lockdown measures, it has returned to growth as companies adjust to life with the virus and prepare for better times ahead,” Chris Williamson, chief business economist at IHS Markit, told The Wall Street Journal on Friday (April 23).

U.S. Federal Reserve Chairman Jerome Powell said earlier this month that the economy appeared to be “at an inflection point,” and should continue to expand. The International Monetary Fund (IMF) in April elevated its global growth forecast to 6 percent, up from 5.5 percent forecast in January.