UK Private Sector Growth Reaches Six Month High Boosting Confidence For Rachel Reeves

The latest data from the S&P UK PMI composite output index reveals a significant boost in private sector activity, climbing to a six-month high in March. The index rose to 52.0, compared to 50.5 in February, marking its best performance since last September. Figures above 50 indicate expansion, underlining positive momentum in UK business activity.

Services companies led the surge, with their activity index increasing to 53.2 in March from 51.0 the previous month. This development offers optimism for the sector’s resilience, as services remain less exposed to the looming trade tariffs expected from Donald Trump’s administration. Businesses in the services industry reported a rise in order books for the first time in 2025, driven by consistent gains in domestic and international sales.

However, the manufacturing sector painted a contrasting picture, with activity dropping to 44.6 from 46.9 in February. Manufacturers cited challenges such as tariff uncertainties, global economic instability, and weaker international demand. Export sales witnessed their sharpest decline since August 2023, forcing many manufacturers to scale back investments and cut jobs. Concerns about future trade measures, particularly those targeting sectors like automotive and semiconductors, have further dampened confidence in this sector.

Economic analysts offered mixed interpretations of the data. S&P Global’s chief business economist, Chris Williamson, cautioned against over-interpreting the improvement, highlighting the fragile nature of the broader recovery. Meanwhile, Rob Wood, chief UK economist at Pantheon Macroeconomics, suggested the data was overly pessimistic, forecasting modest economic growth for the first quarter, despite some lingering challenges.

As interest rate hikes, tighter fiscal policies, and geopolitical volatility continue to weigh on economic stability, experts predict steady yet unspectacular growth for the remainder of the year. The divergence between the buoyant services sector and struggling manufacturing industry highlights the complexities facing the UK economy during this period of uncertainty.