24th Mar 2026 10:01
(Alliance News) - UK service sector growth in March underperformed expectations, while manufacturing growth softened but outperformed market consensus, purchasing managers' index survey results from S&P Global showed on Tuesday.
The flash UK services PMI business activity index fell to a 6-month low of 51.2 points in March from 53.9 in February, underperforming against FXStreet-cited market expectations of a milder fall to 53.0 points. Getting closer to the neutral 50-point mark separating growth from contraction, it indicates the pace of service sector activity growth in the UK slowed in March.
UK businesses reported a hit to customer demand from the war in the Middle East, as business activity expectations for the year ahead "eased considerably", S&P Global said, with optimism falling to the lowest since June 2025.
The flash manufacturing index declined to 51.4 points in March from 51.7 in February, beating expectations of a sharper fall to 51.1 points.
The flash manufacturing output index declined to 50.1 points in March from 52.5 in February.
Manufacturers signalled the sharpest rise in input costs since October 2022, while on-month acceleration of input price inflation across the UK manufacturing sector was the biggest since October 1992, following Black Wednesday the prior month. In September 1992, sterling depreciated sharply, known as the sterling crisis.
The composite output index fell to 51.0 points in March from 53.7 in February, falling short of expectations of a lesser decline to 52.8 points.
S&P Global noted a renewed fall in export sales, amid the fastest reduction in new work from abroad in the service economy since April 2025. "Anecdotal evidence pointed to the postponement of new projects in the Middle East and the impact of reduced international travel," S&P Global said.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said: "The war in the Middle East has hit the UK economy in March, stalling growth while driving inflation sharply higher. Output growth across manufacturing and services has slowed to a crawl as companies blamed lost business directly on the events in the Middle East, whether through heightened risk aversion among customers, surging price pressures, higher interest rates, or via travel and supply chain disruptions."
Further, he noted that inflationary pressures surged due to rising energy prices and fractured supply chains.
The PMI survey draws upon a panel of around 1,300 companies in the UK manufacturing and service sectors, with responses collected between March 12 and 20.
Final March data for UK manufacturing activity will be out on April 1, while services and composite indices will be released April 7.
By Tom Budszus, Alliance News slot editor
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