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United Kingdom PMI March 2022

United Kingdom: Composite PMI moderates in March on weaker manufacturing sector

The S&P Global/CIPS Flash Composite Purchasing Managers’ Index (PMI) fell to 59.7 in March from February’s 59.9. Consequently, the index remained above the 50-threshold, pointing to an improvement in business conditions from the previous month.

The Manufacturing PMI clocked in at 55.5 in March, down from February’s 58.0. The slowdown was driven by weaker output and new orders growth, as firms were faced with spiraling cost pressures, ongoing supply constraints and greater caution among clients—with the latter likely linked to uncertainty generated by the war in Ukraine. The war also led manufacturing firms to accumulate inventories and purchase inputs at a rapid pace in anticipation of potential future supply disruptions. Meanwhile, the Services PMI increased to 61.0 in March (February: 60.5), the highest reading since last June, aided by the removal of Covid-19 restrictions at home. Finally, business sentiment across the private sector as a whole fell to the lowest level since October 2020.

Regarding the near-term outlook, Chris Williamson, chief business economist at S&P Global, commented:

“The survey indicators point to potentially sharply slower growth in the coming months, accompanied by a further acceleration of inflation and a worsening cost of living crisis, which paints an unwelcome picture of ‘stagflation’ for the economy in the months ahead.”

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