• Prior 53.8
  • Manufacturing PMI 49.9 vs 47.8 expected
  • Prior 47.5
  • Composite PMI 52.9 vs 53.1 expected
  • Prior 53.0

The services print was slightly softer but a stronger manufacturing print is a welcome development, contrasting with what is taking place in the euro area at least. Overall, it points to a slight expansion in the UK economy to wrap things up in Q1. And that allows for added breathing room for the BOE to stick to the August timeline to begin cutting rates. But inflation remains a bit stubborn for now, so we'll see how that changes in the months ahead. S&P Global notes that:

“Further signs of the UK economy having pulled out of last year's brief recession are provided by the provisional PMI data for March. A further robust expansion of business activity ended the economy’s best quarter since the second quarter of last year. The survey data are indicative of first quarter GDP rising 0.25% to thereby signal a reassuringly solid rebound from the technical recession seen in the second half of 2023.

“It is also encouraging to see a more broad-based expansion, with a sustained increase in service sector activity accompanied in March by signs of a tentative return to growth for manufacturing output. Business expectations for the year ahead also remain reassuringly lofty by recent standards.

“However, while recession worries have abated, inflation remains a concern. Stubbornly sticky service sector inflation has persisted into March, exacerbated by renewed inflation in the manufacturing sector. While the headline rate of inflation looks likely to cool in the months ahead, March's PMI warns of elevated underlying price pressures which will likely add to calls for restraint in any pivot to lower interest rates until there are firm signs of lower wage growth.”