The number of sectors reporting output growth rose to the highest level in 10 months in February, a new Lloyds survey showed, as the UK economy’s recovery from recession broadened.
10 of the 14 surveys monitored by Lloyds reported an expansion in output, two more than in January and the most since April 2023.
Software services, including data processing firms and software consulting, saw the fastest rate of expansion at 57.5, closely followed by financial services, at 57.4. The 50 mark separates growth from contraction.
Nikesh Sawjani, senior economist at Lloyds, said the survey indicated that the positive start to 2024 looked set to roll on. “Growth is continuing to spread to more and more parts of the UK economy as conditions improve,” he said.
“This positive momentum, alongside last week’s GDP data showing the UK economy expanded in January, provides more evidence that early 2024 is less likely to experience the pattern of economic contraction seen in the second half of last year,” he continued.
Data out last week showed that the UK returned to growth in January, with the economy growing 0.2 per cent. This was largely due to a strong showing from the services sector, and in particular retailers.
The Lloyds survey showed that output growth in the services sector was driven by growing demand, which climbed to its highest level since May 2023.
However, new orders in the manufacturing sector fell for the 11th consecutive month.
Economists think that 2024 will be a better year for the economy than 2023, when the UK fell into a shallow recession, with lower inflation and falling interest rates expected to support growth.
Households are expected to see a significant real income boost as wage growth remains elevated while price pressures ease.
Analysts at Pantheon Macroeconomics forecast that real disposable income would rebound 2.2 per cent in 2024, which would help consumer spending to climb two per cent in the year.