Data released by S&P Global/CIPS showed that activity growth in the UK private sector declined sharply in April, ending a 17-month period of expansion. Subdued order books continued to weigh on business activity, with total new work falling at the sharpest rate since November 2022.
The UK composite PMI fell to 48.5 points from 51.5 points in March. Economists had expected a decline to 48.2. The services PMI fell to 49.0 points from 52.5 points in March. Consensus estimates suggested a drop to 48.9 points.
The report showed that in April, new business in the service sector fell for the third time in four months, driven by weak client confidence and global trade tensions. Overseas demand saw its sharpest drop in over four years. Backlogs continued to shrink, and hiring remained cautious, with job losses extending into a seventh month. Firms faced rising costs due to higher wages and insurance contributions, pushing input inflation to its fastest pace since July 2023. Many responded by raising prices, leading to the strongest output inflation in nearly two years. Business confidence dropped to its lowest since October 2022 amid concerns over economic uncertainty and recession risks.