UK April flash services PMI 48.9 vs 51.5 expected

• Services PMI 48.9 vs 51.5 expected and 52.5 prior
• Manufacturing PMI 44.0 vs 44.0 expected and 44.9 prior
• Composite PMI 48.2 vs 50.4 expected and 51.5 prior.

Key findings:

• Flash UK PMI Composite Output Index at 29-month low.
• Flash UK Services PMI Business Activity Index at 27-month low.
• Flash UK Manufacturing Output Index at 32-month low.
• Flash UK Manufacturing PMI at 20- month low.

Comment:

Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence said:

“While recent months have been characterised by UK businesses treading water, broadly stagnating since last autumn’s Budget, businesses are reporting more of a struggle to keep their heads above water in April.

“April’s fall in output was the largest recorded for nearly two and a half years, consistent with GDP declining at a quarterly rate of 0.3%, reflecting falling activity and demand across both manufacturing and services.

“Job cutting remains aggressive as business optimism about the year ahead sank to a two-and-a-half-year low, and one of the lowest levels yet recorded by the survey, even surpassing the low seen in the immediate aftermath of the Brexit vote in 2016.

“The disappointing survey reflects the impact of headwinds from both home and abroad. The biggest concern lies in a slump in exports amid weakened global demand and rising global trade worries, but higher staffing costs have also piled pressure on companies – linked to the National Insurance and minimum wage changes that came into effect at the start of the month. Just as export orders are falling at the sharpest rate since May 2020, during the pandemic lockdowns, firms’ costs spiked higher to a degree not seen for over two years.

“The collapse in confidence and drop in output during April raise red flags as to the near-term economic outlook and add pressure on the Bank of England to reduce interest rates again at its May meeting. There will be some uncertainty, however, as to whether the recent upturn in price pressures could become entrenched or whether it merely represents a short-term tax-related spike which should be 'looked through'.”