The UK’s private sector expanded at its fastest pace in almost a year in April, driven by robust growth in the country’s services industry. According to analysts, the new economic data provides further evidence that the UK economy is regaining momentum after exiting the recession experienced in late 2023.
On Tuesday, the widely watched S&P Global/CIPS flash UK purchasing managers’ index (PMI) recorded a reading of 54 in April, up from 52.8 in March. The preliminary data-based flash figures represented the highest reading since May of last year. Any reading below 50 indicates a contraction in activity, while any reading above indicates growth.
Chris Williamson, chief business economist at S&P Global Market Intelligence, stated, ‘Early PMI survey data for April indicate that the UK economy’s recovery from recession last year continued to gain momentum.’ ‘While the improving economic recovery picture is welcome news, the upward pressure on inflation will add to concerns that a sustainable path to below target inflation has not yet been achieved.’
Improved growth in the service sector offset a renewed downturn in manufacturing, propelling overall business growth to its fastest pace in nearly a year. This suggests that GDP (gross domestic product) is expanding at a quarterly rate of 0.4% after a 0.3% gain in the first quarter.
The survey revealed that service sector firms reported an acceleration in growth over the month, reaching their highest level in 11 months. Rising business and consumer spending, supported by an improvement in overall economic conditions, were cited by companies.
However, manufacturing production declined for the month, reversing the growth seen in March. The weaker output was attributed to ‘weak market conditions and customer destocking in line with reduced demand.’
The data also showed a rise in input price inflation in April, with the services sector experiencing its steepest cost inflation since last July. Mr. Williamson further added, ‘The upturn encouraged firms to take on workers in increased numbers which, alongside April’s rise in the National Living Wage, drove cost pressures sharply higher.’ ‘While the improving economic recovery picture is welcome news, the upward pressure on inflation will add to concerns that a sustainable path to below target inflation has not yet been achieved.’
