UK PMI services dropped sharply to 51.7 in March, downf rom 54.5 and missed expectation of 54.0. That’s the lowest level in 20 months and it’s “partly linked to snow distruption”.
Quote from Chris Williamson, Chief Business Economist at IHS Markit:
- “The UK economy iced up in March, suffering the weakest increase in business activity since the Brexit vote amid widespread disruptions caused by some of the heaviest snowfall in years. As a result, first quarter economic growth will likely have been adversely affected. The PMI surveys collectively signal a quarterly GDP growth rate of just under 0.3%, down from 0.4% in the fourth quarter, albeit with the rate of growth sliding to just 0.15% in March alone.
- “Inflationary pressures meanwhile picked up again in March. Although running below the peaks seen late last year, rates of both input cost and selling price inflation suggest consumer price inflation could remain stubbornly high in coming months.
- “The latest dip in the survey indicators is comparable to prior months in which the country saw heavy snow, and so will probably do little to alter policymakers’ view on the underlying health of the economy. The indications of solid employment growth and stubbornly high price pressures therefore leave a widely-touted May rate hike very much in play.
- “A strong rebound is nevertheless likely to be needed to ensure the majority of policymakers feel the economy is ready for another hike in interest rates. Encouragingly, in January 2010 and December 2010, the PMI fell sharply due to heavy snow but in both cases the decline was more than reversed in the following month. Some caution is warranted this year, however, as a drop in business expectations about the year ahead during March suggests the underlying trend remains one of weaker economic growth compared to that seen late last year.”
