Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. Sign in to the product or service center of your choice.
The UK PMI surveys indicated a sustained robust pace of
expansion in March as the further reopening of the economy from
COVID-19 containment measures helped offset headwinds from the
Ukraine war, Brexit and rising prices. However, the outlook
darkened as concerns over Russia's invasion exacerbated existing
worries over soaring prices, supply chains and slowing economic
growth. Business expectations are now at their lowest for almost
one and a half years, pointing to a marked slowing in the pace of
economic growth in coming months.
Meanwhile, prices pressures have spiked higher due to increased
energy and commodity prices resulting from the invasion. With March
seeing by far the largest rise in selling prices for goods and
services ever recorded by the survey, consumer price inflation is
set to rise further in the months ahead.
The survey indicators point to potentially sharply slower growth
in the coming months, accompanied by a further acceleration of
inflation and a worsening cost of living crisis, which paints an
unwelcome picture of 'stagflation' for the economy in the months
ahead.
UK PMI current and expected output
UK economy ends first quarter on strong
note
The S&P Global/CIPS composite PMI™ registered 59.7 In March,
according to the preliminary 'flash' reading, down only marginally
form 59.9 in February to indicate a rate of expansion which is
among the strongest recorded over the survey's quarter of a century
history. Only two brief spells, namely the opening up of the
economy from lockdowns in the second quarter of 2021 and the growth
surge seen mid-2013, have seen stronger performances in terms of
output growth.
UK PMI and GDP
Service sector rebounds as economy opens up, but
factory growth slows
The past two months of buoyant growth contrast with a sluggish
start to the year in January, when tightened COVID-19 related
health precautions stymied growth, notably in the service sector.
With these restrictions having now been lifted, service sector
growth has rebounded strongly to reach the fastest since June of
last year.
Service sector growth was led by hotels and restaurants and
other consumer-facing services, where business activity accelerated
amid the near-complete removal of pandemic containment measures.
Business services likewise continued to expand at a solid pace, but
growth weakened for financial services and the transport &
communications sector, which reported a fourth successive monthly
decline.
It was a different story in manufacturing, however, where output
growth faltered in March to the lowest since last October, down
sharply from February's seven-month peak.
Output by sector
The diverging growth rates between manufacturing and services
can be linked to varying order book trends. Whereas new business
inflows into the service sector continued to rise very strongly -
registering the fifth-largest monthly increase in demand seen over
the past seven years despite a drop in overseas sales -growth of
new orders in manufacturing sank to a one-year low, dented by
sluggish domestic sales and near-stalled exports. Both sectors saw
companies reporting weakened demand for services due to the war in
Ukraine. However, while in services this was offset by the further
opening up of the economy, in manufacturing many companies
reporting ongoing additional issues related to Brexit.
In line with the diverging trend in backlogs of accumulated
work, service sector job creation accelerated in March to one of
the fastest rates yet recorded by the survey, but manufacturing
payroll growth slowed.
Employment by sector
However, despite the slowing in factory jobs growth, the overall
level of employment signalled by the survey remained very robust by
historical standards. With the exception of the hiring surge seen
after the lockdowns of 2021, March's jobs gain was one that has not
been exceeded since comparable survey data were available in
1998.
Employment v. labour force survey jobs
Supply delays fall to 17-month low
The March survey also showed an easing of supply constraints,
with the net number of manufacturers reporting delays falling to
the lowest since October 2020. However, materials prices continued
to rise sharply, the rate of inflation accelerating during March.
Many supply lines remained disrupted - worsened by China's latest
lockdowns and the war - lending pricing power to suppliers. Soaring
energy prices likewise added to firms' costs.
Manufacturing supply chains and input
prices
Unprecedented price increase
These higher costs fed through to higher selling prices in
manufacturing, albeit with the rate of inflation remaining below
recent record peaks. Service sector selling price inflation also
accelerated, buoyed by input purchase costs, increasing wage bills
and spiking energy prices to reach the fastest yet recorded by the
survey.
Selling price inflation by sector
Measured across both sectors the increase in selling prices for
goods and services in March was far in excess of any prior increase
recorded in 25 years of survey history, and points to a further -
potentially marked - acceleration of consumer price inflation in
coming months.
PMI selling prices and consumer price
inflation
Ukraine war darkens business outlook
Anecdotal evidence from the survey revealed some initial impact
of the Ukraine war on current output and demand levels, where there
was a more discernible impact on business confidence in the
outlook. Future output expectations were scaled back to the lowest
since October 2020 as concerns over the conflict exacerbated
existing concerns over Brexit, supply chains, prices and economic
growth. Expectations of output growth over the coming year fell to
the lowest since January 2021 in manufacturing and hit the lowest
since October 2020 in the service sector.
Purchasing Managers' Index™ (PMI™) data are compiled by IHS Markit for more than 40 economies worldwide. The monthly data are derived from surveys of senior executives at private sector companies, and are available only via subscription. The PMI dataset features a headline number, which indicates the overall health of an economy, and sub-indices, which provide insights into other key economic drivers such as GDP, inflation, exports, capacity utilization, employment and inventories. The PMI data are used by financial and corporate professionals to better understand where economies and markets are headed, and to uncover opportunities.
At the same time, business costs increased at historically elevated rates, with new record levels of cost inflation… https://t.co/ofDaBfq7KX
May 25
{"items" : [
{"name":"share","enabled":true,"desc":"<strong>Share</strong>","mobdesc":"Share","options":[ {"name":"facebook","url":"https://www.facebook.com/sharer.php?u=http%3a%2f%2fihsmarkit.com%2fresearch-analysis%2fuk-economic-growth-remains-strong-in-march-but-ukraine-war-drives-unprecedented-price-rise-Mar22.html","enabled":true},{"name":"twitter","url":"https://twitter.com/intent/tweet?url=http%3a%2f%2fihsmarkit.com%2fresearch-analysis%2fuk-economic-growth-remains-strong-in-march-but-ukraine-war-drives-unprecedented-price-rise-Mar22.html&text=UK+economic+growth+remains+strong+in+March%2c+but+Ukraine+war+drives+unprecedented+price+rise+and+pushes+business+confidence+to+one+and+a+half+year+low+%7c+IHS+Markit+","enabled":true},{"name":"linkedin","url":"https://www.linkedin.com/sharing/share-offsite/?url=http%3a%2f%2fihsmarkit.com%2fresearch-analysis%2fuk-economic-growth-remains-strong-in-march-but-ukraine-war-drives-unprecedented-price-rise-Mar22.html","enabled":true},{"name":"email","url":"?subject=UK economic growth remains strong in March, but Ukraine war drives unprecedented price rise and pushes business confidence to one and a half year low | IHS Markit &body=http%3a%2f%2fihsmarkit.com%2fresearch-analysis%2fuk-economic-growth-remains-strong-in-march-but-ukraine-war-drives-unprecedented-price-rise-Mar22.html","enabled":true},{"name":"whatsapp","url":"https://api.whatsapp.com/send?text=UK+economic+growth+remains+strong+in+March%2c+but+Ukraine+war+drives+unprecedented+price+rise+and+pushes+business+confidence+to+one+and+a+half+year+low+%7c+IHS+Markit+ http%3a%2f%2fihsmarkit.com%2fresearch-analysis%2fuk-economic-growth-remains-strong-in-march-but-ukraine-war-drives-unprecedented-price-rise-Mar22.html","enabled":true}]}, {"name":"rtt","enabled":true,"mobdesc":"Top"}
]}