Lloyds Bank’s UK Sector Tracker found more UK sectors reported an increase in output in February than at any time in the past 10 months.

Of the 14 sectors monitored by the tracker, 11 saw output expand in February – compared with six in January – the highest number since April 2022. 

Output growth across sectors was supported by increasing numbers of new orders, with 10 of the 14 sectors seeing new order volumes expand last month.

Increasing customer confidence amid weaker inflation helped drive the rise in demand, Lloyds said, and the number of businesses across the economy linking lower orders to higher prices almost halved month-on-month.

Businesses’ own pace of cost inflation also slowed in February and of the 14 sectors monitored, 12 reported a slower pace of cost inflation than the month before.

Tourism and recreation – which includes travel agencies, tour operators and related services – saw price pressures ease.

Meanwhile, UK businesses increased their headcounts for the first time in three months during February, yet reports from firms suffering of staff shortages rose.

In February, the number of businesses commenting on backlogs of work due to labour shortages was at an eight-month high.

Jeavon Lolay, head of economics and market insight at Lloyds Bank Corporate and Institutional Banking, said: "February’s data underlines the economy’s relative robustness, and gives some reasons for optimism for the year ahead.

"While inflationary pressures are still acute and households continue to be cautious with spending, a healthy labour market is helping underpin confidence and demand."