According to the S&P Global/CIPS flash UK purchasing managers’ index, the UK’s private sector, led by the services industry, has demonstrated growth in March, suggesting an uptick after last year’s recession despite challenges like inflation.
The UK private sector has exhibited steady growth in March, according to the latest data from the S&P Global/CIPS flash UK purchasing managers’ index, suggesting the economy is improving after last year’s brief recession. The index reported a reading of 52.9, illustrating growth, although slightly below February’s 53.0 figure and expectations of 53.2. A significant growth driver has been the services industry, which includes sectors such as pubs and insurance, while manufacturing production also increased for the first time in over a year, indicating a potential recovery for factories affected by difficult economic conditions and supply chain disruptions.
Chris Williamson of S&P Global Market Intelligence noted a reduction in recession fears but highlighted ongoing concerns regarding inflation. The expansion across the services sector and a nascent recovery in manufacturing suggest a broader economic recovery. Economist Thomas Pugh predicts the economy will witness gradual growth throughout the year, supported by lower inflation, decreased interest rates, and tax cuts.
In the wider European context, the flash eurozone composite purchasing managers’ index indicated a rise in services activity, reaching a nine-month high of 49.9. Despite this positive trend, economies like Germany and France are still experiencing contraction in business activity. High price pressures and weak output growth remain concerns for the eurozone’s first quarter, with some analysts suggesting the economy may be plateauing.
The European Central Bank is monitoring inflationary pressures, considering interest rate adjustments. Meanwhile, businesses in the region have continued to add jobs, showing modest employment growth. In the UK, an increase in new orders contributes to a positive outlook for the gross domestic product in the first quarter, although rising domestic inflation, particularly in the services sector, persists as a concern.