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United Kingdom PMI March 2024

United Kingdom: Services PMI shows softening growth amid cost pressures

The S&P Global UK Services Purchasing Managers’ Index (PMI) fell to 53.1 in March from 53.8 in February. As a result, the index remained above the 50.0 no-change threshold, but signaled a softer improvement in services sector operating conditions compared to the previous month.

The slowdown was primarily attributed to a weaker rise in new work, with squeezed disposable incomes and high interest rates dampening demand. Additionally, the service sector saw more moderate increases in export orders and employment.

Price pressures in the service sector remained significant, with strong wage and transport costs driving input prices higher. Despite these cost pressures, the rate of prices charged inflation eased to a six-month low, suggesting some limitations in firms’ pricing power. Business sentiment remained positive, with a majority of service providers expecting an increase in output over the next year. However, optimism was slightly tempered by concerns over political uncertainty and client hesitancy.

Tim Moore, economics director at S&P Global Market Intelligence, said:

“Business activity has now expanded for five consecutive months, supported by sustained improvements in new order intakes. The solid growth rate achieved in March reinforces the view that a rebound in service sector performance is helping the UK economy to pull out of last year’s shallow recession.”

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