Chris Williamson, chief business economist at IHS Markit, has commented on the latest Purchasing Managers’ Index surveys published by the organisation.
He said: “With parts of the country hit by some of the heaviest snowfall in years, it was not surprising to see UK business activity disrupted during March. The all-sector IHS Markit/CIPS PMI Output Index fell from 54.2 in February to 52.1, its lowest since July 2016, a time when business was hit by the surprise Brexit vote in the EU referendum.
“At 53.1, down from 54.9 in the fourth quarter, the average PMI reading for the first quarter as a whole signals a GDP growth rate of just under 0.3%, albeit with the rate of expansion sliding to just 0.15% in March alone.
“The 2.1 index point fall in the all-sector PMI between February and March is comparable to prior years in which the country saw heavy snow. In January 2010 and December 2010, the PMI fell by 1.9 and 2.8 points respectively. However, in both cases, the decline was more than reversed in the following month.
“Although the latest data showed manufacturing enjoying the strongest rise in output for three months, suggesting little negative impact on factory production from the adverse weather, construction activity fell at the steepest rate since July 2016 and service sector activity growth also struck a 20-month low amid widespread reports of snow-related disruptions.
“In the services sector, the weakest performances were seen within hotels and restaurants and other consumer-facing activities, followed by transport and communication services. The vast business-to-business services sector has also seen growth trend lower in recent months.
“Trends in new business, meanwhile, deteriorated in all three major sectors of the economy in March. The weakest increases in new orders for 20 months in both manufacturing and service sectors were accompanied by a third consecutive monthly decline in new work within the construction sector. Measured overall, the increase in new work across the three sectors was the smallest since July 2016.
“While slower growth of new orders would normally suggest output growth would weaken in the following month, experience from previous periods of adverse weather suggests order book growth could also rebound in April.”