UK PMI Manufacturing rose from 47.5 to 49.9 in March, above expectation of 47.9, a 20-month high. PMI Services fell slightly from 53.8 to 53.4, below expectation of 53.8. PMI Composite ticked down from 53.0 to 52.9.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, interprets the data as evidence of UK’s recovery from the recession in the latter half of 2023. The aggregate business activity for Q1 suggests 0.25% GDP growth, marking the best quarter since mid-last year
Despite the optimistic growth indicators, inflation remains a pressing issue, particularly in the services sector, where “stubbornly sticky” inflation pressures continue. Moreover, the manufacturing sector saw “renewed inflation”.
While the overall inflation rate is expected to decline in the coming months, March’s PMI data point to “elevated underlying price pressures,” possibly influencing BoE to exercise caution. Williamson, suggests that a decisive shift towards lower interest rates should only occur once there is clear evidence of moderating wage growth.
Full UK PMI release here.
