Positive news includes an acceleration of activity in the UK service sector, improved manufacturing, construction and retail data, a pick-up in car sales and rising house prices buoyed by the Funding for Lending and Help to Buy schemes.
So how can investors play the UK domestic recovery?
It is important to not lose sight of the fact that the link between the UK stock market and the domestic economy is only partial given the international earnings profile of companies listed on the London Stock Exchange.
In fact, some two-thirds of FTSE-100 company revenues are earned outside of the UK so for investors wanting to achieve greater domestic exposure, it is necessary to fish further down the market cap spectrum, and here are six investment ideas for doing it.
l AXA Framlington UK Mid Cap - in contrast to the international earnings make-up of the FTSE-100, the FTSE-Mid 250 Index earns around half its revenues at home so has more domestic characteristics. This fund, managed by Chris St John, is a minnow at circa £17 million, which we see as an advantage.
At least 70% of the fund invests in the FTSE-Mid 250 but it can invest up to 15% in FTSE-100 companies, with the balance in smaller companies, providing some additional flexibility.
l Fidelity Special Values Investment Trust - this trust has a brief to invest across the UK market cap spectrum and some 20% is invested in small caps and 30% in mid-caps. The highly-rated manager Alex Wright has a contrarian style, focused on identifying undervalued stocks with the potential to re-rate.
l Old Mutual UK Smaller Companies fund - typically 40% invested in mid-caps and 60% in smaller companies and currently has a cyclical bias. Some 35% of the portfolio is invested in industrials and 17% in consumer services. Key holdings include Ashtead Group, brewer Greene King, fund manager Jupiter and property groups Bellway, Galliford Try and Barratt Developments.
l Unicorn UK Income - managed by veteran small-cap investor John McLure this fund is 90% invested in smaller companies (10% in mid-caps) with a focus on companies that generate a decent level of dividend. The portfolio is therefore very different from a typical income fund, with large holdings including cinema chain Cineworld, express delivery firm UK Mail Group and wealth manager Brewin Dolphin.
For hard pressed income seekers, this could make an attractive foil to a traditional equity-income fund.
l Venture Capital Trusts - VCTs are restricted to investing in small, UK unquoted or AIM-traded businesses so fish very directly in the UK pond. Several VCTs are fund raising at the moment but it is important to understand the risks and restrictions before investing.
We five-star rate the new £50 million top-up offer across Northern Venture Trust, Northern 2 VCT and Northern 3 VCT which collectively invest across 49 companies such as IT group Kerridge Commercial Systems, cash handling equipment group Volumatic and pub group Wear Inns.
l Henderson UK Property - commercial property has a close correlation with the health of the economy and in recent years has seen some tough times, especially for funds with exposure to the UK high street. We therefore think it makes sense to focus on property funds focused on high quality locations. We like Henderson UK Property which is currently yielding 4.3%.
Finally, while the good economic news should put a spring in the step of investors, it is clear that parts of the UK equity market have priced in a lot of this optimism. Investors should therefore apply a common sense approach of phased investing or buying on any dips, rather than piling in blindly on the back of exuberant data.
Jason Hollands is managing director at financial advisers Bestinvest