The food and drink manufacturing sector has boosted its output for the first time since March, according to a report out this morning.
The latest UK sector tracker from Lloyds revealed that more parts of the economy recorded higher activity levels in May.
Four of the 14 sectors monitored by the tracker grew in May – two more than in April. Software services expanded at the fastest pace (55.8), while food and drink manufacturing (51.1) was back in growth.
Both sectors also reported a rise in demand, as measured by new orders.
A reading on the tracker – which surveys around 1,300 private sector companies each month – above 50.0 indicates expansion, while a reading below means contraction.
The rise in food & drink output follows a report released last week from BDO that showed large food business were feeling their most confident in a decade on the back of rising orders.
In May, the tracker’s composite measure of input cost inflation improved marginally (65.8 in May vs. 67.9 in April). Sectors that are more labour-intensive were the most exposed to cost increases, with tourism and recreation (79.3) reporting the sharpest rate of cost inflation.
Despite this, businesses raised their own prices at the slowest rate in five months. This was driven by weaker demand, which constrained their ability to offset cost pressures through price rises, leading to increased margin pressures.
“This month’s UK sector tracker provides tentative hope that the economy saw a rebound in activity in May with four sectors reporting output growth – two more than in April – while two sectors saw an increase in new orders, up from just one in April,” said Nikesh Sawjani, senior UK economist at Lloyds.
“While most sectors still face weak demand and rising costs are squeezing margins for businesses, the broader uptick in activity could suggest some early signs of renewed momentum.”
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