UK Private Sector Activity Contracts In April

(RTTNews) - The UK private sector activity deteriorated for the first time in one-and-a-haf years in April amid weaker foreign demand linked to tariff uncertainty, flash survey data from S&P Global revealed Wednesday.

The flash composite output index dropped to a 29-month low of 48.2 in April from 51.5 in March. The expected score was 50.4. Any reading below 50 indicates contraction in the sector.

Weaker demand from international markets weighed on business activity in both the manufacturing and service sectors, the survey said.

The services Purchasing Managers' Index also fell to a 27-month low of 48.9 compared to 52.5 in March. The score was well below the forecast of 51.5.

At 44.0, the manufacturing PMI remained at a 20-month low as expected and down from 45.3 in March.

New orders received by British private sector firms fell for the fifth straight month amid a wait-and-see approach by clients due to tariff uncertainty and general concerns about the economic outlook. As a result, export business fell at the steepest pace since May 2020.

Firms reduced their workforce numbers in April, in line with decreased workloads and rising payroll costs.

On the price front, input price inflation rose to the highest since February 2023, with respondents citing higher National Insurance contributions and a rise in the National Living Wage. Consequently, selling price inflation quickened to the sharpest in nearly two years.

Looking ahead, the overall business activity expectations faded to the lowest for two-and-a-half years due to heightened recession risks at home and abroad. Apart from that, many firms reported a negative impact on growth projections from US trade tensions, rising geopolitical uncertainty, and general worries about the broader UK business climate.