Key findings
Embargoed until 0930 BST (0830 UTC) 5 April 2022
News Release
S&P Global / CIPS UK Services PMI®
Source: S&P Global, CIPS.
UK service providers signalled an exceptionally strong
increase in business activity during March and the rate of
expansion accelerated to its fastest for 10 months. Survey
respondents widely noted that the removal of pandemic
restrictions and return to offices had led to a sharp rebound
in customer demand.
However, business expectations for the year ahead dropped
for the second month running and were the lowest since
October 2020. Weaker optimism was mainly linked to the war
in Ukraine and subsequent economic uncertainty. Severe
cost pressures also weighed on confidence and led to a rapid
rise in output charges. The rate of prices charged inflation
was the steepest since the index began in July 1996.
The headline seasonally adjusted S&P Global / CIPS UK
Services PMI® Business Activity Index rose for the third
month running to reach 62.6 in March, up from 60.5 in
February. This highlighted a continued rebound in output
growth from the Omicron-related slowdown seen at the
end of last year. Moreover, the rate of expansion was the
second-strongest since May 1997 (exceeded only by the
post-lockdown recovery in May 2021).
Higher levels of business activity were supported by a strong
rise in new work during March. More than twice as many
survey respondents (31%) reported an increase in new orders
as those that signalled a fall (15%). Businesses operating in
the travel, leisure and entertainment sectors commented on
especially strong demand during the latest survey period.
Greater business requirements and robust long-term
expansion plans fuelled another month of strong job
creation in March. The latest rise in staffing numbers was the
fastest since October 2021. Survey respondents suggested
that tight labour market conditions had made it difficult to
fill vacancies and pushed up starting salaries.
Recruitment difficulties, capacity constraints and worsening
supplier performance all contributed to an increase in
backlogs of work across the service economy in March.
Higher levels of unfinished business have been recorded in
each of the past 13 months, although the latest rise was the
slowest so far in 2022.
An unprecedented 40% of the survey panel reported an
increase in their average prices charged in March, while only
3% signalled a decline. The resulting seasonally adjusted
Prices Charged Index pointed to the strongest rate of
inflation since the survey began in July 1996.
Another rapid rise in output charges was overwhelmingly
linked to higher salary payments and increased prices paid
for energy, fuel and raw materials. Around 65% of the survey
panel reported a rise in their operating expenses in March,
while less than 1% noted a decline. The latest index reading
signalled the second-fastest rate of input cost inflation since
the survey began (exceeded only by the record high seen last
November).
Concerns about the impact of escalating inflationary
pressures on household budgets acted as a brake on growth
expectations across the service sector in March. Survey
respondents also cited uncertainty related to the war in
Ukraine and greater hesitancy among clients. The overall
degree of positive sentiment regarding the business outlook
dropped to its lowest for 17 months.
