Business Activity in the U.K. Increases Again


Though things are looking grim in the eurozone, the United Kingdom showed signs of dodging a recession, although one month of data hardly makes a trend.

Markit reports:

Business activity in the UK service sector increased for a second consecutive month in February. New business also increased, leading to a further expansion of payrolls.

Confidence also continued to improve, with optimism regarding future activity at a nine-month high. However, rising input costs squeezed operating margins, as competitive pressures continued to restrain the pricing power of service providers.

The headline seasonally adjusted Business Activity Index posted 51.8 in February, slightly above January's 51.5 and a five-month high. Modest growth of activity has now been signalled for two successive months. More than 23% of respondents recorded increased activity since January, with anecdotal evidence suggesting stronger client demand led to the development of new projects and larger client bases.

There is no ready explanation for why the U.K. posted slightly positive results. Perhaps it is because the nation is less reliant on trade with other EU nations. Perhaps it is because, despite austerity moves, its consumer economy has recovered somewhat as the recession has gotten further from its deepest point.

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