LONDON – Britain’s private sector has reported the steepest rise in prices charged by companies since at least 1999 and optimism is at its lowest ebb in almost a year and a half, a survey showed on Thursday.
The preliminary S&P Global/CIPS composite Purchasing Managers’ Index (PMI) for March edged down to 59.7 from a historically high 59.9 in February, much less of a fall than the drop to 57.8 forecast in a Reuters poll of economists.
The PMI for Britain’s private-sector services hit its highest in nine months, but output in the manufacturing sector was reported at its lowest in five months.
Chris Williamson, chief business economist at S&P Global, said the further reopening of the economy after COVID-19 restrictions had helped to offset the drag from the conflict in Ukraine, Brexit and rising prices.
“However, the outlook darkened as concerns over Russia’s invasion exacerbated existing worries over soaring prices, supply chains and slowing economic growth,” he said.
Average prices charged rose by the most since records began in 1999, driven by the services sector as businesses sought to pass on unprecedented rises in their operating expenses.
The Bank of England, which has raised interest rates at its last three meetings and is expected to do so again in May, is watching closely for signs that the recent acceleration in consumer price inflation is becoming embedded in the economy.
The PMI‘s measure of business optimism dropped to its lowest since October 2020.
“The survey indicators point to potentially sharply slower growth in the coming months, accompanied by a further acceleration of inflation and a worsening cost of living crisis, which paints an unwelcome picture of ‘stagflation’ for the economy in the months ahead,” Williamson said.