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Flash PMI: Continued inflationary concerns but weakening labour market

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Small downside surprise for UK services PMI (53.4 verusus consensus and prior at 53.8) while the manufacturing PMI surprised to the upside (49.9 versus 47.8 consensus and 47.5 prior). The composite output PMI was 0.2 points lower than consensus, falling 0.1 point to 52.9. The survey is likely to have been seen by the MPC (although we have no confirmation of that until we see the Minutes later). Looking at the details, inflationary pressures appear to still be a concern with input prices still high, particularly for manufacturers, while services output prices still seem sticky. There's not much commentary on wages but the press release notes that employment "stagnated". More highlights from the press release below:

  • Input prices: "Input prices continued to rise at a sharp pace in March, with the rate of inflation the second-fastest since August 2023" (highest was last month). For manufacturing: "The latest increase in purchasing prices was the steepest for one year, which survey respondents often attributed to increased freight costs and tight supply following Red Sea shipping disruptions. Goods producers also indicated another lengthening of suppliers’ delivery times, although the latest downturn in vendor performance was much less marked than in February."
  • Output prices: "Prices charged inflation at private sector firms edged up to its highest since July 2023. This was underpinned by another robust rise in prices charged by service sector firms."
  • Labour market: "Private sector employment stagnated in March. Survey respondents typically commented on cautious hiring strategies due to strong cost pressures, especially in the service sector. Some firms also cited an elevated degree of natural attrition amid difficulties retaining existing staff and finding suitable candidates to fill vacancies."
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Small downside surprise for UK services PMI (53.4 verusus consensus and prior at 53.8) while the manufacturing PMI surprised to the upside (49.9 versus 47.8 consensus and 47.5 prior). The composite output PMI was 0.2 points lower than consensus, falling 0.1 point to 52.9. The survey is likely to have been seen by the MPC (although we have no confirmation of that until we see the Minutes later). Looking at the details, inflationary pressures appear to still be a concern with input prices still high, particularly for manufacturers, while services output prices still seem sticky. There's not much commentary on wages but the press release notes that employment "stagnated". More highlights from the press release below:

  • Input prices: "Input prices continued to rise at a sharp pace in March, with the rate of inflation the second-fastest since August 2023" (highest was last month). For manufacturing: "The latest increase in purchasing prices was the steepest for one year, which survey respondents often attributed to increased freight costs and tight supply following Red Sea shipping disruptions. Goods producers also indicated another lengthening of suppliers’ delivery times, although the latest downturn in vendor performance was much less marked than in February."
  • Output prices: "Prices charged inflation at private sector firms edged up to its highest since July 2023. This was underpinned by another robust rise in prices charged by service sector firms."
  • Labour market: "Private sector employment stagnated in March. Survey respondents typically commented on cautious hiring strategies due to strong cost pressures, especially in the service sector. Some firms also cited an elevated degree of natural attrition amid difficulties retaining existing staff and finding suitable candidates to fill vacancies."