Data released by S&P Global/CIPS showed that activity in the UK private sector continued to expand in March, but was below economists' forecasts and preliminary estimates. Moreover, the latest reading signaled a solid upturn in private sector business activity.
The UK composite PMI fell to 52.8 points from 53.0 points in February. Economists had expected a decline to 52.9 points. Meanwhile, the services PMI fell to 53.1 points from 53.8 points in February. Consensus estimates suggested a decrease to 53.4 points. Both indices are above the 50-point mark, which indicates an expansion of activity in the sector, for the fifth month in a row.
"The recovery in service sector output lost a little bit of momentum during March, and more so than suggested by the flash PMI results, but the overall picture remains reasonably positive," said Tim Moore, Economics Director at S&P Global Market Intelligence.
The report showed that new orders in the service sector increased moderately, although the rate of growth slipped to a four-month low. The data also signaled a slowdown in the growth of export orders. The number of staff increased only slightly in March, while the pace of job creation was the slowest since the beginning of 2024. Backlogs of work fell again in March (for the 10th month in a row), but the rate of decline was the weakest since June 2023. Strong input price inflation continued in March. Around 29% of the survey panel reported an increase in their average cost burdens, while only 2% signaled a reduction. Meanwhile, around 21% of service sector firms reported a rise in their output prices in March, while 5% noted a reduction. As for the prospects for business activity for the coming year, slightly more than half of the respondents forecast an increase in production volumes during this period, while only one in ten predicts a decrease. The degree of business optimism decreased slightly compared to the previous month, but was higher than at any other time since February 2022.