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Reopening boom as UK economy grows at fastest pace since 2013

·Senior City Correspondent, Yahoo Finance UK
·3-min read
People outside pubs and restaurants in Soho, London, on the day some of England's coronavirus lockdown restrictions were eased on 12 April. Photo: AP Photo/Alberto Pezzali
People outside pubs and restaurants in Soho, London, on the day some of England's coronavirus lockdown restrictions were eased on 12 April. Photo: AP Photo/Alberto Pezzali

The UK economy has boomed since large swathes of the country were allowed to reopen, according to new data.

Closely-watched private sector data showed the economy was growing at its fastest rate since 2013 in April. Official data showed retail sales surged in March as shoppers bought new clothes as they prepared to go out again.

IHS Markit's closely watched purchasing managers' index (PMI) showed activity is rebounding rapidly across the economy. Private sector activity grew at the fastest rate since 2013 in April, IHS Markit said, with all part of the economy growing rapidly.

"Companies are reporting a surge in demand for both goods and services as the economy opens up from lockdowns and the encouraging vaccine roll-out adds to a brighter outlook," said Chris Williamson, chief business economist at IHS Markit.

"In more than 23 years of PMI history, we have only seen one spell of faster growth than this, recorded between August and November 2013."

READ MORE: UK enjoying 'roaring' comeback as economy reopens

The latest PMI survey, published on Friday, delivered a preliminary reading of 60 for April. PMIs are given on a scale of 0 to 100, with anything above 50 signalling growth and anything below meaning contraction.

Separate retail sales data from the Office for National Statistics published on Friday showed growth in UK retail sales hit a nine month high in March.

The data underscores the rosy picture of the economy that has emerged since large parts of the country were allowed to reopen earlier this month. Non-essential retail, outdoor dining and bars, and leisure facilities such as gyms were allowed to reopen across England from 12 April. Restrictions have similarly been eased across Wales.

Earlier this week, Deutsche Bank said initial data suggested the UK was making a "roaring comeback" since reopening. Barclay's (BARC.L) said fast data suggested there had been a "sharp uptick in activity". 

Economists at Dutch bank ING said the raft of economic indicators suggested the UK's "economic winter is finally thawing".

April's strong PMI performance extends gains seen in March as the UK enjoyed a mini building boom, manufacturing activity picked up sharply, and the service sector rebounded rapidly in anticipation of reopening.

READ MORE: UK economic recovery from COVID second wave already underway

"Business activity should continue to grow strongly in May and June as virus restrictions are eased further, setting the scene for a bumper second quarter for the economy," Williamson said. 

"There’s also good news for the job market. With optimism about the year ahead continuing to run close to March’s all-time high, firms have been encouraged to take on extra staff at a rate not seen for over three and a half years."

While the domestic economy is booming, Williamson said exports remained "lacklustre, often linked to post-Brexit trading conditions". Expensive imports were also pushing up manufacturing costs, which is likely to filter through to higher prices later this summer.

Earlier on Friday, IHS Markit data showed economic activity was picking up across the eurozone thanks to a manufacturing boom. Eurozone PMI was 53.7 in April, the company said.

WATCH: What is a V-shaped economic recovery?

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