UK economy leaves recession behind, but inflationary pressures are increasing – PMI

By William Schomberg

LONDON, Feb 22 (Reuters) – The British economy has maintained its momentum since early 2024 as a survey showed strong growth in services businesses and business optimism at its highest levels in two years, but inflationary pressures are likely to keep the Bank of England cautious about reducing borrowing costs.

The UK's preliminary S&P Global/CIPS Purchasing Managers' Index (PMI), which includes services and manufacturing companies, rose to 53.3 points, the highest level in nine months, from 52.9 points in January, strengthening signs that a British recession last year is likely. To be short term.

Economists polled by Reuters had expected no change from January's reading.

Thursday's survey showed that average cost burdens rose in February at the fastest pace in six months, driven by higher labor costs as well as higher shipping costs for manufacturers linked to the crisis in the Red Sea.

Among services companies, the Purchasing Managers' Index remained at 54.3 points. The manufacturing sector remained below the no-growth threshold of 50.0, but rose to 47.1 from 47.0 in January.

Overall, new business creation rose at the fastest pace since May last year, but companies were cautious about hiring due to sharp wage increases.

(Reporting by William Schomberg; Editing in Spanish by Jose Muñoz)

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