Achi news desk-
Housebuilding and commercial construction were both virtually unchanged last month. The stabilization in residential work was the best performance in more than a year for housebuilders who have struggled during a market downturn fueled by higher interest rates and the cost of living crisis.
READ MORE: UK interest rate disappointment after Bank of England call
The headline reading for activity across all subsectors increased from 49.7 in February to 50.2 in March, the highest since August last year. Any reading above 50.0 indicates a general expansion of output.
Although modest, the improvement is encouraging and adds to evidence that the recession the UK fell into at the end of last year may already be over.
The March UK Manufacturing PMI released earlier this week showed production and new orders rising after a long period of contraction. The headline reading of 50.3 marked the first time in positive territory for the sector since July 2022.
On the other hand, growth in the UK’s dominant economic services sector slowed during March due to fears of sticky inflationary pressures. The PMI reading of 53.1 undercut expectations and was down from February’s 53.8, but remains in positive territory.
So what to make of it all? Well, it seems the UK may be in the fragile early stages of an economic recovery of some sort, but don’t get the party poppers out.
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The economy has been close to stagnation for a number of years now, largely due to a lack of long-term investment in the infrastructure and training needed to support healthy levels of productivity. Although it would be nice to think that a new ruling party in Westminster will have a plan to reform this among its top priorities, such a prolonged ruin cannot be rectified overnight.
So meaningful growth will remain elusive. The best case scenario is a decidedly gradual recovery as lower inflation, falling interest rates, and tax cuts boost consumer spending to help feed the leading services sector.
