Britain’s economy beat European rivals as business activity hit a six-month high at the end of the year.
A closely watched measure published yesterday showed output rose for the second month in a row in December, as the UK continued to dodge a recession.
Meanwhile business activity in the eurozone fell at a steeper rate this month.
Output in the bloc has fallen at its fastest rate for 11 years, barring the early-2020 Covid months, with downturns recorded across both manufacturing and service sectors.
Research showed that the private sector output expanded for the second month in a row in December as the economy showed signs of recovery.
Moving ahead: Closely watched measure showed output rose for the second month in a row in December, as the UK continued to dodge a recession
It was the fastest rise since June, driven by a rebound in the service economy. The figures come as a relief as on Wednesday data showed the economy shrank unexpectedly by 0.3 per cent in October.
And on Thursday the Bank of England held interest rates at a 15-year high of 5.25 per cent for the third meeting in a row.
The central bank has warned the base rate needs to remain high to bring inflation back down to its 2 per cent target, but financial markets are betting on rate cuts next year. Chris Williamson, chief business economist at S&P Global Market Intelligence, said: ‘The economy continues to dodge recession, with growth picking up some momentum at the end of the year to suggest that GDP stagnated over the fourth quarter as a whole.’
All eyes turn to next week when inflation data is released. The S&P Global CIPS Purchasing Managers’ Index (PMI) – which covers the manufacturing and services sectors – rose to 51.7 this month compared to a reading of 50.7 in November.
A PMI reading of more than 50 signals that activity is growing rather than contracting. At the same time, the eurozone index had a reading of 47 in December, down from 47.6 in November. That was the seventh consecutive monthly reduction in business activity across the bloc.
Despite the overall positive reading for the UK, manufacturing production decreased for the 10th month in a row at a ‘notably faster pace’ than in November.
Williamson said it was a ‘dual-speed economy, with manufacturing contracting sharply while services regained some poise’.
John Glen, chief economist at CIPS – the Chartered Institute of Procurement & Supply – said: ‘Stable interest rates are fuelling a tentative return of customer demand and increase in new work.
‘However, UK manufacturing will be glad to see the back of 2023.’
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