In March, 12 out of 14 UK sectors monitored by the Bank of Scotland UK Recovery Tracker reported output growth, up from ten in February. Of those, eight saw faster month-on-month output growth, four more than the month before.
However, while UK services businesses benefitted from strong demand and a further loosening of Covid restrictions, goods producers were disproportionately affected by the conflict in Ukraine - leading to the largest gap between manufacturing and service output growth in 13 years.
Cost inflation rose across the economy for the third month running in March, with the tracker’s input price index registering a reading of 82.2 for the UK, its second-highest on record and only lower than the out-turn recorded last November.
Jeavon Lolay, head of economics and market insight at Lloyds Bank Commercial Banking, part of Bank of Scotland owner Lloyds Banking Group, said: “Alongside labour market shortages, the unrelenting pressure from rising costs represents another major challenge for most UK businesses.
“Both service and manufacturing firms face higher inflation, in part driven by the ongoing war in Ukraine - a factor that is weighing particularly heavily on manufacturing activity.
“The tracker shows that more businesses are raising prices, likely as a direct effort to help offset higher input costs. All eyes will be on how sustained and widespread this trend will be in the months to come.”