LONDON (Reuters) – Britain’s dominant services sector reported a pickup in activity and new orders last month but worries about rising employment costs, U.S. tariffs and a weaker economic outlook weighed on the outlook, an industry survey showed on Thursday.
The S&P Global UK Services Purchasing Managers’ Index (PMI) rose to its highest since August 2024 at 52.5 in March from 51.0 in February, although it was revised down from a preliminary “flash” reading of 53.2.
Rising business activity was mainly “attributed to improving order books”, S&P Global said.
New export orders rose for the first time in four months and at the fastest rate since October 2024, mainly due to a rebound in demand in Europe, although some respondents cited weaker demand from the U.S.
But Tim Moore, economics director at S&P Global Market Intelligence, said firms were concerned about increasing wages and the impact of U.S. President Donald Trump’s tariffs agenda.
“Service providers reported a range of constraints on growth, including stretched household budgets, risk aversion among corporate clients and rising geopolitical uncertainty,” Moore said.
“Service businesses also remained cautious about the near-term outlook, with optimism still among the lowest seen over the past two years.”
Input costs rose at the weakest pace in 2025. Firms cited lower transportation costs helped to offset rising wages and suppliers raising prices in response to rising employer payroll taxes, which take effect this month.
While staffing numbers fell for the sixth month in a row, the pace of job shedding was its slowest since last November.
The composite PMI, which combines the services survey with Monday’s subdued manufacturing PMI, rose to 51.5 in March, up from 50.5 in February, but lower than a Reuters poll forecast of 52.0.
(Reporting by Suban Abdulla; Editing by Hugh Lawson)
