UK services firms show rapid growth, cost pressures balloon -PMI

UK services firms show rapid growth, cost pressures balloon -PMI
UK services firms show rapid growth, cost pressures balloon -PMI   -   Copyright  Thomson Reuters 2022   -  
By Reuters

<div> <p><span class="caps">LONDON</span> – British services companies enjoyed stronger growth last month than first estimated despite rampant inflation pressures, with business activity rising at the fastest rate in 10 months, a survey showed on Tuesday.</p> <p>The S&P Global/CIPS UK Services <span class="caps">PMI</span> rose to 62.6 in March from 60.5 in February, an upward revision from a preliminary “flash” reading of 61.0 and far above the 50 threshold for growth.</p> <p>The upturn reflected the removal of pandemic health restrictions and increased spending on leisure and entertainment services, but the survey pointed to tougher times ahead for Britain’s economy.</p> <p>The <span class="caps">PMI</span>’s gauge of increases in prices charged by services companies rose to its highest level since records began in 1996. Costs paid by companies also rose sharply.</p> <p>Last month the Bank of England warned that growth looks set to slow amid a global surge in inflation pressures, fuelled by turmoil in commodity markets following Russia’s invasion of Ukraine.</p> <p>“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,” said Tim Moore, economics director at S&P Global, which compiles the survey.</p> <p>The services survey’s gauge of business expectations fell to its lowest level since October 2020 and there were some signs that the inflation picture could still worsen.</p> <p>“Many survey respondents commented that the full extent of the recent spike in their operating costs had yet to be passed on to customers,” Moore warned.</p> <p>The composite <span class="caps">PMI</span>, which combines the services <span class="caps">PMI</span> with Friday’s manufacturing survey, rose to 60.9 from 59.9, its highest level since June 2021 and up from the flash reading of 59.7.</p> <p/> </div>