According to the PMI surveys, UK economic growth slowed sharply in the start of the second quarter. The three Markit/CIPS PMI surveys collectively indicated the weakest rate of expansion since March 2013, with growth slowing across the board. The combined Output Index fell from 53.6 in March to 51.9 in April.
UK economic growth slowed sharply in April according to the PMI surveys, suggesting the second quarter could see GDP growth weaken further compared to the 0.4% expansion seen in the first three months of the year.
The 12-month outlook for services activity according to survey respondents remained relatively subdued in April, with sentiment the joint-weakest in over three years as firms continued to report an undercurrent of market uncertainty.
Cost pressures picked up, showed the largest monthly increase since September 2014. A combination of the introduction of the National Living Wage and the increase in oil prices seen during the month reflected in the rise. Average prices for goods and services rose only modestly, as strong competitive forces often prevented firms from hiking prices without losing business.
Employment across the three sectors continued to rise, but the rate of job creation fell to the lowest since August 2013. Although the survey is consistent with around 50,000 private sector jobs being created per quarter, that’s less than half the rate of jobs growth seen at the turn of the year.
“The latest reading is consistent with a near-stalling of economic growth, down to just 0.1% in April. The deterioration in April pushes the surveys into territory which has in the past seen the Bank of England start to worry about the need to revive growth, either by cutting interest rates or non-standard measures such as quantitative easing.” notes Chris Williamson, Chief Economist at Markit.
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