United Kingdom: Services and manufacturing PMIs remain subdued in April
May 3, 2018
Growth in the UK services sector picked up slightly in April after severe weather impacted activity in March. IHS Markit/CIPS UK services Purchasing Managers’ Index (PMI) rose from 51.7 in March to 52.8 in April. However, April’s figure undershot market expectations of 53.5 and still marked the second-lowest figure in just over 18 months. Despite this, the indicator remains above the 50-point threshold that separates expansion from contraction.
April’s uptick came on the back of slightly faster output and new orders growth, although both remained sluggish, with some firms reporting that consumers were reluctant to spend. Employment expanded at the weakest rate since March 2017, amid higher payroll costs and signs of labor shortages, while both input and output price inflation dimmed. Despite subdued current conditions, business confidence picked up in April.
Chris Williamson, Chief Business Economist at IHS Markit, commented:
“The…PMI surveys collectively showed only a muted rebound in business activity after being disrupted by heavy snowfall in March, failing to regain February’s pace of growth to suggest that the underlying performance of the economy has continued to deteriorate.”
The IHS Markit/CIPS manufacturing PMI decreased from a revised 54.9 in March (previously reported: 55.1) to an over one-year low of 53.9 in April. However, the index remains well above the 50-point threshold that separates expansion from contraction in activity in the manufacturing sector, where it has been since August 2016.
April’s decline was driven by slower growth in output, new orders and employment, while new export business was the weakest since February last year. In addition, lower backlogs of work and higher stocks point to a subdued reading in May. Both input and output price inflation eased in April, although input price inflation was still elevated on higher commodity and raw material prices.
Author: Oliver Reynolds, Economist