The UK’s private sector has experienced a significant surge in growth this April, reaching its fastest pace in nearly a year. This growth is largely attributed to a robust performance in the country’s service industry. The S&P Global/CIPS flash UK purchasing managers’ index (PMI), a closely monitored indicator of economic activity, recorded a reading of 54 in April, marking an increase from 52.8 in March. These preliminary figures represent the highest reading since May 2023. A score above 50 signifies growth, while a score below 50 indicates contraction. According to Chris Williamson, chief business economist at S&P Global Market Intelligence, the PMI survey data for April suggests that the UK economy’s recovery from the recession last year is continuing to gain momentum. The improved growth in the service sector compensated for a renewed downturn in manufacturing, resulting in the fastest overall business growth in nearly a year. This indicates that GDP (gross domestic product) is likely rising at a quarterly rate of 0.4%, following a 0.3% gain in the first quarter of 2023. The survey found that service sector firms reported an acceleration of growth over the month, reaching the strongest level in 11 months. Companies cited rising business and consumer spending, supported by an improvement in broader economic conditions, as contributing factors to this growth. However, manufacturing production declined for the month, reversing the growth seen in March. This decline in output was attributed to weak market conditions and customer destocking in line with reduced demand. The data also revealed an acceleration in input price inflation in April, with the service sector experiencing the steepest cost inflation since last July. Williamson notes that the upturn in economic activity encouraged firms to hire more workers, which, coupled with the April increase in the National Living Wage, has led to a sharp rise in cost pressures. While the improving economic recovery is welcome news, the upward pressure on inflation raises concerns about achieving a sustainable path to below-target inflation.
UK Private Sector Growth Surges to Near One-Year High in April
