British businesses saw a strong rebound in orders in March as they prepared for the relaxation of coronavirus restrictions this month, and ramped up their hiring for the first time since the pandemic struck, a survey showed.
The IHS Markit/CIPS composite Purchasing Managers’ Index – measuring Britain’s huge services sector and its manufacturers – jumped to 56.4 from 49.6 in February, going into positive territory above 50.0 for the first time in three months.
However, the final reading was a little lower than a preliminary estimate of 56.6.
Britain’s economy contracted by almost 10% last year but is expected to grow by around 5% or 6% in 2021 as the country makes quick progress with its vaccination programme.
Two thirds of services firms, which have typically been hit hardest by the lockdowns, expected business to increase over the year ahead, the most positive reading since the end of 2006.
Some services companies said they received a boost from increased residential property transactions during March.
Finance minister Rishi Sunak announced an extension of a tax cut for property purchases on March 3.
A measure of employment turned positive for the first time since February last year, and pointed to the biggest increase in hiring since mid-2019 as businesses planned for reopening when COVID restrictions ease in April and May.
The Bank of England is watching closely for how much further Britain’s unemployment rate rises from its most recent level of 5% as it keeps its stimulus programmes at emergency crisis settings.
Business with the European Union remained disrupted after Britain left the bloc’s single market on Jan. 1, with orders from Asia and the United States unable to offset the fall in EU exports for service providers.
International travel restrictions also hurt services exporters.
However, the pace of decline in orders from abroad was the least severe in 13 months, IHS Markit said.
Main Photo: A pedestrian walks past a giant artwork depicting British writer William Shakespeare near London Bridge station in London, Britain. EPA-EFE/FACUNDO ARRIZABALAGA