• Final Services PMI 52.5 vs 53.2 expected
• Prior 51.0
• Final Composite PMI 51.5 vs 52.0 expected
• Prior 50.5

Key findings:

• Modest expansion of service sector business activity
• New work rises for first time in three months, but job cuts continue
• Steep increase in input prices, driven by higher payroll costs

Comment:

Tim Moore, Economics Director at S&P Global Market Intelligence, said:

“March data revealed an acceleration in UK service sector growth to its fastest since August 2024 as a renewed upturn in new orders helped to boost overall business activity.

“However, the subsequent modest recovery in private sector output has been sustained by a relatively narrow segment of the UK economy, primarily technology and financial services. Transportation, leisure and hospitality firms reported weak business conditions in March, while the manufacturing sector saw its fastest drop in production since October 2023.

“Service providers reported a range of constraints on growth, including stretched household budgets, risk aversion among corporate clients and rising geopolitical uncertainty. Service businesses also remained cautious about the near-term outlook, with optimism still among the lowest seen over the past two years. Worries about increasing wages and the impact of forthcoming US tariffs were the most cited challenges in March.

“A combination of subdued order books and elevated input cost inflation led to cautious recruitment policies. Job cuts have now been recorded for six months in a row, reflecting a sustained period of hiring freezes and redundancies.

“The survey’s inflation trackers for the service economy were again much stronger than seen in the decade prior to the pandemic. Efforts by suppliers to pass on higher payroll costs were widely reported as a factor leading to increasing prices charged in March.”

This article was written by Giuseppe Dellamotta at www.forexlive.com.