UK private sector business activity in the first few weeks of March saw the fastest upturn in the services sector since last August.
This is the headline from the UK CIPS/S&P Global purchasing managers' index survey, where the composite output index rose to 52.0 from 50.5, reaching a six-month high.
The services sector PMI rose to a seven-month high of 53.2 for March from 51 in February, while the manufacturing PMI provided less good news, falling to 44.6 from 46.9.
Positive signs included that businesses intend to shed jobs by less than previously feared to cope with higher taxes.
Services companies reported improvements in both domestic and overseas sales, while manufacturers experienced "severe headwinds to demand" from rising global economic uncertainty and potential US tariffs.
Weak international demand resulted in the fastest decline in manufacturing export sales since August 2023, the survey found, with production volumes down by the most since October 2023.
But service providers reported an increase in new work for the first time in 2025 so far, with some commenting on a "tentative turnaround in demand conditions", especially in consumer services, while headwinds to demand from political and geopolitical uncertainty remain.
Regarding inflation, with official figures out later this week, input cost inflation eased further from January’s nine-month high, with services companies recording steeper rises than manufacturers due to "intense" wage pressures.
Output charge inflation was unchanged since the previous month, as a slight slowdown in the service sector offset an acceleration in factory gate price inflation to its strongest since April 2023, blamed on forthcoming increases to National Insurance contributions and the minium wage, though were also "sporadic reports" of discounting to stimulate sales.
"Stubbornly high price pressures will add to BoE’s concerns about upside inflation risks," said economist Ashley Webb at Capital Economics on the UK PMI update.
"Despite the rise in the composite activity PMI in March, it’s still consistent with the near-stagnation in GDP in recent quarters continuing in Q1."
"With price pressures still elevated, the BoE will be concerned about the growing upside risks to inflation."
What he says was most striking, was the rebound in the employment balance, from 43.5 to 47.4, after six monthly falls in the past seven months, which chimes with Capital Economics' own employment indicator, "which gives an overall signal on employment and suggests jobs growth is cooling rather than collapsing".
Overall, says Webb, "this combination of less worrying news on employment but still elevated concerns about prices increases the chances of the BoE pausing interest rate cuts a bit earlier than we expect, perhaps in May rather than in August".