UK manufacturing grew at the fastest pace in 10 months in February, while the services sector expanded at the slowest pace in two months, leading to stable growth of the private sector survey data showed Friday. The flash IHS Markit / CIPS Flash UK Composite Purchasing Managers' Index showed a reading of 53.3 in February, unchanged from January. A reading above 50 suggests expansion in the sector.
The latest reading pointed to the joint-fastest expansion of private sector output since September 2018, IHS Markit said. The flash services PMI fell to a two-month low of 53.3 from January's 53.9. In contrast, the flash manufacturing PMI hit a 10-month high of 51.9 versus 50.0 in January. Though receding political uncertainty boosted business as well as consumer confidence, the overall rate of new order growth eased from the 19-month peak seen in January amid the weakness in the services sector.
Several service providers reported that the coronavirus, or Covid-19, outbreak had weighed on overseas bookings and resulted in the cancellation of some orders from clients in Asia, particularly those based in mainland China, IHS Markit said. In manufacturing, extended shutdowns in China led to stocks of inputs falling at the fastest pace for over seven years and vendor lead times lengthening to the greatest extent since March 2019.
The supplier delivery times sub-index dropped seven points signalled the largest month-on-month slide in supply chain performance since the survey began in 1992 and exceeded the previous record seen during the UK fuel protests in September 2000, the survey found. Despite the coronaviurs concerns, output growth expectations across the UK private sector improved slightly since January and remained the highest since June 2015.Service providers were more optimistic than manufacturers. "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, with our GDP nowcast pointing to 0.2 percent growth through the first quarter of the year," IHS Markit Associate Director Tim Moore said.