UK Service Sector Experiences Slowest Growth in Eleven Months

The latest data from S&P Global reveals that the UK service sector is facing its slowest growth in nearly eleven months. The Services Purchasing Managers’ Index (PMI) dropped significantly to 50.5 in March, a decline from February’s figure of 53.9. This marks the lowest level since April 2025 and falls short of the initial estimate of 51.2.

Decline in New Orders and Employment

For the first time since November 2025, new orders in the service sector fell. This contraction was recorded at the sharpest pace in eight months. Concurrently, the sector is grappling with rising input costs and output charge inflation, both hitting an 11-month high.

Backlogs and Staffing Challenges

• Despite ongoing challenges, backlogs of work have remained broadly stable.
• Service providers reported sufficient capacity to manage current workload demands.
• International shipping delays and supply chain issues continue to affect operations.

Interestingly, the pressure on business capacity appears to be easing. This, along with the necessity to control rising payroll costs, has led to further declines in employment levels during March.

Export Sales and Business Optimism

Export sales have taken a considerable hit, declining at the fastest rate since April 2025. Furthermore, business optimism has reached its lowest point in nine months, as many companies remain wary of future prospects.

In summary, the UK service sector’s current landscape indicates significant hurdles. With the slowest growth recorded in eleven months, businesses must navigate the complexities of rising costs, dwindling orders, and weakened optimism.