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UK Private Sector Activity Expands Most In 11 Months

The UK private sector economy grew at the quickest pace in nearly a year in April amid a robust growth in service sector output, flash survey results from S&P Global showed on Tuesday.

The composite output index rose to 54.0 in April from 52.8 in March. A reading above 50.0 indicates expansion in the private sector.

Service sector growth was the fastest in eleven months on the back of rising business and consumer spending.

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The services Purchasing Managers’ Index, or PMI, climbed to 54.9 in April from 53.1 in March.

At the same time, the manufacturing sector turned to contraction in April, as the PMI dropped to 48.7 from 50.3 in the previous month. Lower output levels were often linked to weak market conditions and customer destocking in line with reduced demand.

New orders received by the British private sector grew at the strongest pace since May 2023, mainly driven by the service economy as manufacturers saw a moderate downturn in order books.

Private sector employment rose marginally in April, though at the steepest pace in nine months.

However, cost pressures intensified across the private sector, with input price inflation rising to an 11-month high in April. The cost inflation was more evident in the services sector due to higher salary payments. Despite this, the overall increase in output charges during April was the slowest seen since February 2021.

Looking ahead, prospects for business activity over the next 12 months were still positive, with optimism levels higher than they had ever been in 2023.

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