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The UK's private sector saw its growth slow in April, as inflation and the war in Ukraine continued to weigh on output, preliminary figures from S&P Global showed Friday.
The flash S&P Global/CIPS composite purchasing managers' index dropped to 57.6 in April from 60.9 in March.
‘April data pointed to a much weaker speed of recovery across the UK economy, largely due to the slowest rise in new orders so far in 2022. Survey respondents mainly noted that the cost of living crisis and economic uncertainty arising from the war in Ukraine had impacted client demand,’ S&P Global said.
The flash services PMI fell to a three-month low of 58.3 points in April from 62.6 in March, while the manufacturing PMI inched higher to 55.3 from 55.2.
S&P Global noted the loss of momentum in the service economy - a 4.3 index point drop - was the largest in any month since Omicron hit business activity across the sector at the end of 2021.
Manufacturing output growth rebounded in April after hitting a five-month low during March. ‘Goods producers suggested that efforts to work through backlogs and fewer supplier delays were the main positive influences on production schedules,’ S&P Global said.
Chris Williamson, chief business economist at S&P Global said: ‘The survey data signal a marked cooling in the pace of UK economic growth during April, caused by an abrupt slowing in demand. Orders received by manufacturers have almost stalled, driven by an increasing loss of exports, and growth of demand for services has slumped to among the weakest since the lockdowns of early 2021.’
The falling demand, Williamson pointed out, can be attributed to the rising cost of living, with Covid also continuing to affect many businesses.
‘Concerns over the worsening inflation picture are meanwhile flamed by another near-record leap in firms' costs,’ he continued. ‘Although the current pace of growth remains relatively robust, firms are taking a more cautious approach to hiring and spending as demands cools and the outlook becomes gloomier, to suggest that the slowdown in the economy has further to run.’
The S&P Global/CIPS flash PMI is compiled from responses to questionnaires sent to survey panels of around 650 manufacturers and 650 service providers. The data was collected between April 11 to 20.
The slowed private sector growth followed data showing retail sales slumped in the UK in March, the Office for National Statistics said, and came in significantly worse than market consensus.
March's retail sales volumes dropped by 1.4% from the month before, worsening from February's revised 0.5% fall. According to FXStreet, market consensus had tipped just a 0.3% month-on-month fall in March.
Overnight, GfK's Consumer Confidence Index fell five points to minus 31 in March as consumers confront a ‘wall of worry’ amid 30-year-high levels of inflation.
It is the fourth month in a row that the survey's headline figure has dropped, to a level last seen in October and November 2020 when Covid numbers were rising.
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