(Alliance News) - UK service sector activity accelerated in March at its fastest pace since May 2021 following an Omicron-induced slowdown at the start of the year, S&P Global said on Tuesday.
The S&P Global-CIPS UK services purchasing managers' index rose for the third month running to reach 62.6 points in March, up from 60.5 in February. The reading was higher than the preliminary estimate of 61.0.
S&P said UK service providers signalled a strong increase in business activity during March, and the rate of expansion accelerated to its fastest for 10 months. Survey respondents widely noted that the removal of pandemic restrictions and return to offices had led to a sharp rebound in customer demand, it noted.
However, S&P said, business expectations for the year ahead dropped for the second month running and were at the lowest level since October 2020. Weaker optimism was mainly linked to the war in Ukraine and subsequent economic uncertainty.
Further, severe cost pressures also weighed on confidence and led to a rapid rise in output charges. The rate of prices charged inflation was the steepest since the index began in July 1996, it said.
The UK composite PMI was revised higher to 60.9 points in March from a preliminary reading of 59.7 and above February's 59.9 to signal the fastest rise in private sector activity since June 2021.
Tim Moore, economics director at S&P Global, said: "UK economic growth continued to surge higher in March after an Omicron-induced slowdown at the turn of the year. Service sector companies led the way as business activity expanded at the fastest pace since the post-lockdown recovery seen last May. There were widespread reports citing a boost to business and consumer spending from the roll back of pandemic restrictions.
"However, the near-term growth outlook weakened in March, with optimism dropping to its lowest since October 2020 as the war in Ukraine and global inflation concerns took a considerable toll on business sentiment... Soaring costs meant that output charges were increased to the greatest extent for more than 25 years in March. Many survey respondents commented that the full extent of the recent spike in their operating costs had yet to be passed on to customers."
The UK services PMI was compiled by S&P Global from responses to questionnaires sent to a panel of around 650 service sector companies.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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