The S&P Global UK Composite PMI rose to 52.0 in March 2025 from 50.5 in February, surpassing market expectations of 50.3, a preliminary estimate showed.
UK business activity growth hits six-month high
While the reading signals only modest private sector growth, it marks the highest level since September, suggesting a gradual recovery. The expansion was primarily driven by the services sector, which saw its strongest growth since August, benefiting from resilient consumer demand and improving business activity.
In contrast, the manufacturing sector remained a weak spot, with output shrinking for the fifth consecutive month and registering its steepest decline since October 2023. Survey respondents pointed to persistent supply chain disruptions, weaker global demand, and concerns over potential US tariffs as key factors weighing on factory activity. New order volumes also highlighted a stark divide between sectors—while manufacturers experienced a sharp drop in demand due to economic uncertainty, service providers saw new work increase for the first time this year, reflecting renewed confidence in certain industries.
Employment keeps on decreasing
Employment levels continued their downward trend, falling for the sixth straight month, as businesses remained cautious about hiring amid lingering economic uncertainty. On the inflation front, input cost pressures eased further from January’s nine-month high, providing some relief to businesses. However, prices charged continued to rise at a strong pace, suggesting that companies are still passing costs onto consumers.
Business confidence remains subdued
Finally, business confidence remained subdued, hovering near January’s 25-month low, as firms remained wary of potential headwinds, including high interest rates, geopolitical risks, and the broader global economic outlook. Investors and policymakers will be closely watching upcoming economic indicators and the Bank of England’s next moves for further signals on the UK’s growth trajectory.
