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A strong contribution from the UK services sector helped to offset weaker manufacturing sector growth in March, preliminary survey results from S&P Global showed on Thursday.
The flash UK services purchasing managers' index registered 61.0 points in March, up from 60.5 in February. The latest reading was above the market forecast, cited by FXStreet, of 58.0.
However, the flash manufacturing PMI fell to a 13-month low of 55.5 points in March from 58.0 in February, and was well below market expectations of 56.7.
The flash composite PMI slipped to 59.7 in March from 59.9 in February as a result, but was above market consensus of 57.8.
S&P Global said UK service sector activity increased at a steep and accelerated pace in March, with the removal of Covid-19 restrictions helping to fuel the strongest growth since June of 2021.
However, escalating inflationary pressures and concerns related to Russia's invasion of Ukraine led to a slump in business optimism to its lowest since October 2020, S&P noted.
Chris Williamson, chief business economist at S&P Global, said: ‘The UK PMI surveys indicated a sustained robust pace of expansion in March as the further reopening of the economy from Covid-19 containment measures helped offset headwinds from the Ukraine war, Brexit and rising prices. However, the outlook darkened as concerns over Russia's invasion exacerbated existing worries over soaring prices, supply chains and slowing economic growth.
‘Business expectations are now at their lowest for almost one and a half years, pointing to a marked slowing in the pace of economic growth in coming months. Meanwhile, prices pressures have spiked higher due to increased energy and commodity prices resulting from the invasion. With March seeing by far the largest rise in selling prices for goods and services ever recorded by the survey, consumer price inflation is set to rise further in the months ahead.’
The S&P Global-CIPS flash UK composite PMI was compiled by S&P Global from responses to questionnaires sent to survey panels of around 650 manufacturers and 650 service providers, collected from March 11 to 22.
Debt ratings agency S&P merged with data firm IHS Markit, the compiler of the PMIs, in an all-share deal struck at the end of 2020.
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