Forex

A solid performance from manufacturing and services means that economic growth likely strengthened in the first quarter

The U.K economy is likely to have experienced solid growth during the first quarter, according to a key survey by the British Chambers of Commerce, although inflation is increasingly seen as a risk by businesses.

Manufacturing and services sector companies saw an increase in both domestic and export demand during the period.

Moreover, the number of firms that reported higher sales and orders was higher than that seen in previous quarters which suggests that, far from slowing as some have previously suggested, UK economic growth may have actually strengthened in the first quarter.

However, and on the downside, inflation pressures are increasingly a source of concern for some companies, with many reporting that they will begin raising their own product prices within the next three months.

That said, employers have continued to expand their headcount and intentions around hiring remain favourable.

Furthermore, companies have reported experiencing recruitment challenges, which suggests that a further pickup in wage growth may be just around the corner.

The British Chambers of Commerce survey is based on responses from over 7,000 businesses, which makes it the largest reading of activity in the private sector for the U.K.

Thursday’s survey came closely on the heels of Office of National Statistics data, released Wednesday, that showed unemployment remaining steady during the three months to the end of February. Wage growth also rebounded, rising from 2.1% back up to 2.3% during the period.

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