UK Businesses Recovering, Yet PMI Reveals Lingering Concerns Over Prices

08 Apr, 2024

UK Businesses Recovering, Yet PMI Reveals Lingering Concerns Over Prices

British businesses are maintaining their recovery momentum, despite persistent concerns about rising prices, as revealed by a recent survey. The S&P Global Composite Purchasing Managers' Index (PMI) for March dipped slightly to 52.9 from February's 53.0, closely monitored by the Bank of England (BoE) before its interest rate decision. While economists anticipated a reading of 53.1, the index has remained above the growth threshold for five consecutive months, indicating a promising trajectory for the UK's exit from recession. In contrast, France and Germany continue to experience economic downturns, highlighting the UK's resilience.

Analysts suggest that the BoE may adopt a cautious stance on interest rates, given signs of a short-lived recession last year. Official data reflects a decrease in consumer price inflation to 3.4% in February, though services inflation persists at elevated levels. The services sector PMI for March dropped to 53.4, accompanied by a slowdown in employment and new orders. Conversely, the manufacturing sector nearly ended its 20-month downturn, with the PMI inching closer to the no-change mark at 49.9. Despite positive output growth, concerns persist over escalating input costs and selling prices, signaling ongoing challenges for businesses navigating the post-recession landscape.