UK business activity continues to expand, albeit less than expected

UK business activity continued to expand in March, albeit less than expected, according to a survey released on Thursday.

The S&P Global services purchasing managers’ index dipped to 53.1 from 53.8 in February. This remained comfortably above the 50.0 mark that separates contraction from expansion and marked the fifth month of growth.

However, it was below the flash estimate of 53.4 and signalled the slowest rate of business activity expansion since November 2023.

The composite output index - which measures activity in the services and manufacturing sectors - came in at 52.8 in March, down slightly from February's nine-month high of 53.0 but still indicative of a solid upturn in private sector business activity.

Tim Moore, economics director at S&P Global Market Intelligence, said: "The recovery in service sector output lost a little bit of momentum during March, and more so than suggested by the flash PMI results, but the overall picture remains reasonably positive.

"Business activity has now expanded for five consecutive months, supported by sustained improvements in new order intakes. The solid growth rate achieved in March reinforces the view that a rebound in service sector performance is helping the UK economy to pull out of last year's shallow recession.

"Survey respondents once again commented on a turnaround in business and consumer spending, despite constraints on clients' budgets from strong inflation and elevated borrowing costs."