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Cast of Star Trek Into Darkness at The Empire cinema in Leicester Square, May 2013
Cast members at the premiere of 'Star Trek Into Darkness' at The Empire cinema in Leicester Square in London, May 2013. Barclaycard said spending rose 3.6% last month compared with April last year, led by 21% growth in spending on cinema and theatre tickets. Photograph: Will Oliver/EPA
Cast members at the premiere of 'Star Trek Into Darkness' at The Empire cinema in Leicester Square in London, May 2013. Barclaycard said spending rose 3.6% last month compared with April last year, led by 21% growth in spending on cinema and theatre tickets. Photograph: Will Oliver/EPA

UK economy picking up, surveys suggest

This article is more than 10 years old
CBI sees signs of rising business confidence, while Lloyds data shows growth in seven of England's nine regions

Britain is starting to see green shoots of recovery as business activity picks up, companies continue to hire new staff and consumers start to spend again.

A series of surveys published on Monday suggest the UK is on the road to recovery after its double-dip recession, providing a boost for chancellor George Osborne.

Business lobby group the CBI expects the economy to grow by 1% this year and 2% in 2014. That contrasts with the IMF, which recently slashed its growth forecast for the UK from 1% to 0.7%, and suggested Osborne should rethink his austerity programme.

The CBI has consistently supported the chancellor on austerity, although it has called for more measures to boost growth. John Cridland, director general of the CBI, said on Monday: "The UK economy is moving from flat to growth."

But he warned that the country continues to face big challenges. "Although recent data suggests rising business confidence, the economic climate remains tough, hampering demand here and overseas. Meanwhile, consumers remain under pressure, as inflation continues to outstrip wage growth."

In April, business activity grew at its fastest rate in eight months, according to Lloyds TSB's purchasing managers' index. The PMI – which is based on data from 1,200 manufacturing and services companies – came in at 52.2 in April, up from 51.6 in March, moving further above the 50 mark that separates growth from contraction.

The survey showed growth in seven of England's nine regions, led by Yorkshire & Humber with a reading of 55.7. Only the West Midlands and the North East reported a slight reduction in business activity, hit by a weaker performance of the manufacturing sector and spending in those regions.

Elsewhere, it seems Britons are going out more and parting with their cash, cheered by the warm weather. Barclaycard said spending rose 3.6% last month compared with April last year, led by 21% growth in spending on cinema and theatre tickets. Restaurants also benefited with an 11% increase in spending, as did DIY stores, up 8.5%. Growth in spending online continued to outstrip the high street, up 11.7% on last year, compared with just 1.7% in bricks and mortar shops.

Valerie Soranno Keating, chief executive of Barclaycard, said: "Although economic data is generally mixed, this is the first time since 2011 that we've seen growth above 2% for three consecutive months, which may suggest a more sustained improvement in sentiment."

A forward-looking survey of the jobs market suggests it too is looking healthy, with growth in employment set to continue in the second quarter. The Chartered Institute of Personnel and Development said more employers are expecting to increase headcount than those who intend to cut jobs, with a balance of +9, up from +5 for the previous quarter.

Gerwyn Davies, CIPD labour market adviser said: "Even though last month's official figures showed a slight dip in the level of employment, these findings suggest that further employment growth is possible."

But he notes that the number of jobs being created may fail to keep pace with the population growth, meaning unemployment could still rise.

Business confidence also picked up in April, driven by an improving services sector, according to consultants BDO. Its output index for UK businesses – which predicts short-term turnover expectations – moved from 93 to 94.1, closer to the 95 mark that would indicate growth. Peter Hemington, partner at BDO, said: "We're pleased to see confidence slowly returning to UK businesses, and the continuing revival of the all important services sector." But morale declined in the manufacturing sector, with the output index dropping from 92.4 to 90.8.

Hemington said: "The manufacturing sector is a particular concern. If it is serious about its plan to rebalance the UK economy, we continue to believe that the government could do more to help UK manufacturing, particularly by encouraging both lending and investment in the sector."

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