All sector UK PMI points to Q1 slowdown and gloomy outlook despite upturn in March
Commenting on the March UK PMI survey results, expert from Markit, Chris Williamson, said:
“Survey data indicate a slowing in UK economic growth in the first quarter, with the suggestion that the pace is more likely to ease further rather than recover in coming months as business confidence remains unsettled by worries at home and abroad.
“The latest Markit/CIPS PMI business surveys recorded a slight upturn in the pace of business activity growth in March, but the improvement was insufficient to prevent the data from indicating a slowdown in economic growth in the first quarter.
“At 53.7, the weighted average output index from the three surveys was up from 52.9 in February, when the index sank to the greatest extent for four-and-a-half years. The resulting first quarter average PMI reading is consequently the lowest since the second quarter of 2013.
“The surveys point to a 0.4% increase in gross domestic product, down from 0.6% in the closing quarter of last year. Even this weaker pace of expansion was only achieved thanks to a strong January. The February and March surveys were at levels consistent with just 0.3% growth.
“Across the three main sectors of the economy, firms reported the smallest increase in demand for just over three years, which in turn fed through to a reluctance to take on new staff. March saw the weakest rate of job creation for over two-and-a-half years.
“Business confidence remains in the doldrums as concerns about the global economy continue to be exacerbated by uncertainty at home, with nerves unsettled by issues such as Brexit and the prospect of further government spending cuts announced in the Budget.
“It therefore seems unlikely that March’s upturn in the pace of growth represents the start of a longer term upswing. In contrast, the data suggest growth could weaken further in the second quarter. With the PMI already in territory traditionally associated with the Bank of England choosing to loosen policy, interest rate hikes seem a long way off.”
