The latest survey from S&P Global/CIPS showed that business activity in the private sector declined slightly in March after reaching its highest level since May 2023 in February. This largely reflected increasing business activity in the service economy. Manufacturing production nonetheless turned a corner, ending a 12-month period of decline, amid the fastest rise in new orders since May 2022.
The UK composite PMI fell to 52.9 points from 53.0 points in February. Consensus estimates suggested a rise to 53.1 points. The index remains above the 50-point mark, which indicates an expansion of activity in the private sector, for the fifth month in a row. The services PMI fell to 53.4 points (3-month low) from 53.8 points in February, while the manufacturing PMI rose to 49.9 points (20-month high) from 47.5 points. Economists had expected the services PMI to remain at 53.8 points and the manufacturing PMI to increase to 47.8 points.
Data showed that new orders in the private sector rose again in March (for the 4th month in a row), but the growth rate slowed slightly compared to the 9-month high in February. Meanwhile, the total volume of export orders increased for the first time since May 2023, but only slightly. Despite a sustained rebound in business activity and incoming new work, private sector employment stagnated in March. Unfinished work fell again in March (for the eleventh consecutive month), but the rate of backlog depletion was the slowest seen since June 2023. The data also indicated a steep increase in input costs across the private sector as a whole, with the rate of inflation easing only slightly from February's six-month high. Prices charged inflation at private sector firms edged up to its highest since July 2023. This was underpinned by another robust rise in prices charged by service sector firms. The latest survey showed a mixed picture of business activity expectations, as service providers recorded a decline in confidence, while optimism in the manufacturing sector reached its highest level since April 2023. A number of service providers have reported concerns about the weak growth prospects for the UK economy and the impact of political uncertainty in the next 12 months.