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UK services sector activity slowed in April as strong inflationary pressures and the war in Ukraine limited the pace of expansion, S&P Global said on Thursday.
The UK services purchasing managers' index registered 58.9 points in April, down from 62.6 in March. However, the latest print was higher than the preliminary figure of 58.3.
The UK composite PMI, which includes manufacturing activity, decreased to 58.2 points in April from 60.9 in March.
S&P said that, although the UK service sector remained firmly inside growth territory during April, there were signs that sustained increases in the cost of doing business and the war in Ukraine were limiting the pace of expansion at the start of the second quarter. In particular, new business growth slowed sharply and was the weakest in the year-to-date.
Further, S&P highlighted that service providers reported an unprecedented increase in their input costs at the start of the second quarter, with prices rising to the greatest extent since the survey began in July 1996. There were widespread reports from panellists of increased fuel costs, with higher energy charges and wages also key contributors to rising cost burdens.
Andrew Harker, economics director at S&P Global, said: ‘The twin headwinds of the cost of living crisis and the war in Ukraine started to bite on the UK service sector during April, as evidenced by a sharp slowdown in new order growth to the lowest in the year so far. Worryingly, companies seem to be expecting impacts to be prolonged, with business confidence dropping to the lowest in a year-and-a-half.
‘Indeed, cost pressures show little sign of abating, with inflation even accelerating in April to the strongest in almost 26 years of data collection. The feeding through of these cost pressures to charges for customers means that the spell of rapid inflation clearly has further to run.’
The UK services PMI was compiled by S&P Global from responses to questionnaires sent to a panel of around 650 service sector companies, collected from April 11 to 27.
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