UK PMI services rose to 50.4 in April, up from 48.9 and matched expectations. March’s reading was a 32-month low. Markit noted marginal rise in service sector business activity. New work dips for the fourth month in a row. Input cost inflation accelerates to its highest since January.
Chris Williamson, Chief Business Economist at IHS Markit, which compiles the survey:
“A near-stagnant service sector in April means that all three major parts of the economy were struggling to grow in April. Although the service sector joined construction in reporting a return to growth, in both cases the expansions were only marginal. An upturn in manufacturing is meanwhile showing signs of waning, as a temporary boost from Brexit-related stockpiling faded in April.
“The resulting rise in business activity signalled collectively by April’s PMI surveys was only marginal, suggesting the economy remained more or less stalled at the start of the second quarter.
“The disappointing start to the second quarter follows a first quarter in which the average PMI reading was the lowest since late 2012 and indicative of the economy flat-lining.
“Although business grew more optimistic about the outlook, linked in part to more favourable prospects amid the reduced threat of an imminent ‘no deal’ Brexit, forward-looking indicators such as order books and backlogs of work hint at a near-term sustained weakness of demand, which has already filtered through to a reduction of employment.
“Both GDP and labour market numbers could therefore disappoint in coming months, as the weakness of the survey data feeds through to official data.”
