The United Kingdom's service sector continued its solid growth in March, but at the slowest rate in four months, due to a slight decline in new business, according to final data reported by S&P Global.
The services purchasing managers' index, which gauges economic trends in the manufacturing and service sectors, dropped to 53.1 in March from 53.8 in February. This figure was also lower than the projected score of 53.4, yet any score above 50 still signifies expansion.
March marked the fifth consecutive month of expansion for the UK service sector, though the pace of this expansion hasn’t been this slow since November 2023.
The increase in new orders slowed down to its least rapid rate in four months. The overall rise is linked to stable business and consumer spending, in spite of the challenges brought on by high borrowing costs and tighter client budgets.
Export demand also saw a reduced increase in March, with the rise in demand from the United States and significant European markets driving this expansion.
As a result, employment growth in the British service sector decelerated to the slowest rate thus far this year. The elevated cost pressures and drive for efficiency gains have resulted in hiring freezes and non-replacement of staff members who voluntarily left their positions.
In terms of pricing, input price inflation remained high in March due to increased salary payments and higher fuel and transportation costs, while selling price inflation decreased due to competitive pressures.
Service providers remained optimistic about their business prospects within the coming year, but this optimism has slightly diminished since February.
The composite output index, which measures changes in business activity across the private sector, declined to a rating of 52.8 in March, down from a nine-month high of 53.0 in February. This implies a steady increase in private sector business activity.
