The latest Bank of Scotland UK Recovery Tracker said that the last time this many UK manufacturers and services firms were in growth mode was in September, two months before the start of the second national lockdown.
The lender has found that the output of 11 of the 14 UK sectors monitored by the tracker increased last month, up from six in February. Manufacturers of technology equipment (69.7), metals and mining products (64.3), and transport operators (62.8) recorded the strongest growth. A reading above 50 signals output rising, while anything below that indicates contraction.
Technology equipment manufacturing – which includes producers of specialist parts in smart devices, motor vehicles, computers and industrial machinery – recorded the strongest output growth for the second month in a row as global demand for components powered up at the fastest pace for more than seven years.
Global demand for British technology helped UK manufacturing firms outperform services businesses for a 13th consecutive month, but the gap between them narrowed as more UK services sectors recorded growth in March.
Transport was the best-performing services sector last month, with output rising at its fastest rate since January 2017 after contracting sharply in January (31.5) and February (43.5). Firms, including airlines and rail and bus operators, said the rebound was driven by a surge in bookings for domestic travel ahead of restrictions easing, for example.
The output of the UK software (56.6) and industrial services (60.5) sectors rose for the second consecutive month, with providers citing a rise in corporate spending on support both for continued remote working and the reopening of offices where permitted.
The rise in sectors registering output growth pushed the pace of the UK’s economic recovery ahead of the global benchmark for the first time in six months during March. Ten of the 14 sectors monitored by the tracker were ahead of their global peers, up from just two in February, while 14 also reported an increase in job-creation as lockdown restrictions eased – the highest number since July 2018.
However, while overall UK manufacturing exports rose month on month, only technology equipment producers outperformed their European peers on new export orders during March.
Jeavon Lolay, head of economics and market insight at Lloyds Bank Commercial Banking, said the UK’s recovery is “clearly accelerating”, adding: “It is particularly promising that so many UK sectors reported output growth in March... It suggests that [gross domestic product] growth picked up further in March, and bodes well for the coming quarter as restrictions are hopefully further eased.
“The recovery in hiring across the majority of UK sectors represents a key signal of returning business confidence, which I would expect to continue to strengthen and broaden as restrictions are lifted and the pace of growth really takes off.”
Scott Barton, MD of corporate and institutional coverage at Lloyds Bank Commercial Banking, added: “Business activity is clearly more upbeat than expected, and offers confidence for a sharp upturn ahead. The situation will be a considerable relief, especially for the hardest hit sectors of the economy which hopefully stand to play a leading role in the recovery.”