UK Services Sector Performs Better Than Anticipated

The S&P Global UK Services PMI rose to 52 in April 2026 from 50.5 in the prior month, surpassing market forecasts of 50, flash estimates showed. Business activity growth picked up from March’s 11-month low, with firms citing support from technology investment, marketing initiatives, and long-term business plans. However, new orders posted a marginal reduction, reflecting fragile demand conditions due to rising global uncertainty and higher inflationary pressures amid the ongoing Middle East conflict. Employment also continued to decline. Turning to prices, inflationary pressures increased sharply. Input cost inflation was the steepest since the survey began almost 30 years ago, largely due to higher fuel prices, alongside strong wage pressures. Output charges also rose significantly. Lastly, business sentiment deteriorated amid worries about geopolitical tensions weighing on costs, demand, and investment.

The S&P Global UK Services PMI was revised lower to 50.5 in March 2026 from a flash estimate of 51.2, down from February's 53.9. The sector saw its slowest expansion in the ongoing 11-month growth streak amid rising global economic uncertainty linked to the Middle East conflict. Output rose only slightly, while total new work fell for the first time since November 2025, recording the sharpest contraction in eight months. Export orders also fell sharply, marking the fastest decline since April 2025. Staffing numbers were further reduced, amid a lack of pressure on business capacity, alongside the need to mitigate rising payroll costs. Backlogs remained broadly unchanged despite widespread shipping delays and supply chain disruptions. Input cost inflation picked up to a 11-month high, driven by higher prices paid for fuel, transportation and raw materials. March saw continued positive expectations for business activity, although sentiment eased markedly from January’s 15-month high.

The S&P Global UK Services PMI fell to 51.2 in March of 2026 from 53.9 in the previous month, firmly below market expectations that it would ease to 53 to mark the softest pace of expansion since September of last year, according to a flash estimate. New work for service providers slowed amid pressure from the fastest decline in orders from abroad in nearly one year, with foreign clients citing the postponement of new projects in the Middle East and the reduction of international travel. In the meantime, service providers noted a sharp increase in average cost burdens, also related to halted shipping routes from the war in the Middle East. The squeezed margins and softer orders growth drove companies to lower their hiring pace. Lastly, the continued geopolitical risks from the war pressed optimism for service providers.