By Ian McConnell
GROWTH of the UK private sector economy has slowed sharply to its weakest pace in three months, a key survey showed yesterday, with demand hit by the cost-of-living crisis and economic uncertainty arising from Russia’s invasion of Ukraine.
The seasonally adjusted, flash UK composite output index from S&P Global and the Chartered Institute of Procurement and Supply has fallen to 57.6 this month.
The composite output index was 60.9 in March.
Although the latest reading remains well above the level of 50 deemed to separate expansion from contraction, the drop in the index this month signals a sharp slowdown in the rate of growth.
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This has been driven by a significant deceleration of services sector expansion, with the pace of manufacturing output growth accelerating.
The loss of momentum in services growth was the largest in any month since the Omicron variant of Covid-19 hit business activity across the sector at the end of 2021.
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S&P Global and CIPS said: “April data pointed to a much weaker speed of recovery across the UK economy, largely due to the slowest rise in new orders so far in 2022. Survey respondents mainly noted that the cost-of-living crisis and economic uncertainty arising from the war in Ukraine had impacted client demand.”
They added: “Service providers experienced a considerable loss of momentum as the pass-through of escalating costs offset the boost to consumer spending from the ending of Covid-19 restrictions. Manufacturers also faced a headwind to order books from rising output charges, with the latest increase in factory gate prices by far the fastest on record.”
The flash UK services business activity index has fallen to 58.3 this month, from 62.6 in March. The flash UK manufacturing output index has risen to 53.8 this month, from 51.8 in March.
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