Economists have said strong UK data suggests the country will escape a ‘triple-dip recession’, but warned a recovery in economic growth will not be easy.
Simon Ward, chief economist at Henderson, said solid UK Purchasing Managers’ Index (PMI) data for the services sector was “another nail in the triple-dip coffin”.
“The optimism here about UK growth prospects for 2013, based on faster real money supply expansion during 2012, is supported by encouraging February surveys of services and retailing,” he said.
The PMI surveys reflect the health of the economy. A score of more than 50 signals growth, while a mark of less than 50 indicates a decline.
Last month, services sector PMI hit 51.8 – a five-month high. But manufacturing and construction figures both fell, although they make up a smaller proportion of the economy.
Peter Dixon, economist at Commerzbank, said he had “never been a triple-dip proponent”.
“Although we only have data from the first two months of the year so far, on balance I think we will get a stronger quarter than we saw in the fourth quarter of last year,” he said.
Mr Dixon pointed to stronger average PMI data than at the end of last year, but cautioned it was still averaging at roughly 50, which signified economic stagnation.
“We are still hovering around the 50 mark – not pulling decisively away – which suggests we are stuck in low gear.”
But Capital Economics argued a triple-dip was still a persistent threat in 2013.
“The economy is still flirting with a further contraction in GDP in the first quarter,” a research note from the company stated last week.
“A material improvement soon remains unlikely given that the inflation squeeze on consumers is intensifying, overseas demand for exports is fading, and another round of austerity begins in April.”
