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United Kingdom PMI April 2024

United Kingdom: UK services sector shows strong growth in April

The S&P Global UK Services Purchasing Managers’ Index (PMI) rose to 55.0 in April from 53.1 in March. As a result, the index moved further above the 50.0 no-change threshold, and signaled a faster improvement in services sector business activity compared to the previous month.

New order volumes grew at the fastest pace for 11 months in April. This was partly due to stronger business and consumer spending, linked to greater optimism towards the broader economic outlook. Additionally, there were higher levels of new work from abroad, particularly from clients in the U.S. and Asia. Despite this marked improvement in new order intakes, there was a marginal fall in backlogs of work, indicating that business capacity was sufficient to handle new and existing workloads.

April saw the sharpest overall increase in input costs since August 2023, driven by higher wages amid a significant rise in the minimum wage from April. Conversely, prices charged by service sector firms rose at the slowest pace in three years, suggesting that competitive pressures and promotional discounting constrained pricing power. Service providers remained optimistic about future business activity, although the degree of optimism has eased from February’s two-year peak.

On the implications for GDP data, Tim Moore, economics director at S&P Global Market Intelligence, said:

“The latest survey results are consistent with the UK economy growing at a quarterly rate of 0.4% and therefore pulling further out of last year’s shallow recession.”

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