The latest survey from S&P Global/CIPS showed that business activity in the private sector increased in March and reached a 6-month high, driven by the fastest upturn in the service economy since August 2024. In contrast, manufacturers experienced severe headwinds to demand from rising global economic uncertainty and potential US tariffs.
The UK composite PMI rose to 52.0 points in March from 50.5 points in February. Consensus estimates suggested a drop to 50.3 points. An index value above 50 points indicates an expansion of activity in the sector. The services PMI rose to 53.2 points (7-month high) from 51.0 points in March, while the manufacturing PMI fell to 44.6 points (18-month low) from 46.9 points. Economists had expected the services PMI to increase to 51.2 points and the manufacturing PMI to increase to 47.3 points.
Data indicated that goods producers recorded a steep export-led downturn in overall sales, while service providers signaled an increase in new work for the first time in 2025 to date. Some service providers commented on a tentative turnaround in demand conditions, especially for consumer services. Private sector employment fell for the sixth consecutive month in March, as businesses restructured, invested in automation, and avoided replacing departing staff to offset rising payroll costs. However, job cuts slowed, especially in services. Input cost inflation eased but remained above the long-term average, with service providers facing steeper price increases due to wage pressures. Manufacturers also reported rising costs from suppliers passing on higher employment expenses and raw material prices, particularly metals. Output price inflation remained steady, with services slowing slightly while factory gate prices rose at their fastest pace since April 2023. Business confidence stayed near a 25-month low, with manufacturers the least optimistic since November 2022 due to concerns over US tariffs and weak export demand. However, service sector optimism reached a five-month high, citing improving sales opportunities.