Economic Buzz: UK business activity picks up in April but rising costs weigh on outlook

Business activity across the UK private sector regained momentum in April after slowing in March, supported by moderate growth in both manufacturing and services. The S&P Global Flash UK PMI Composite Output Index rose from 50.3 to 52.0, marking a solid expansion and extending the current growth streak to 12 months.

Manufacturing output returned to growth after a slight decline in March, with some firms reporting that customers brought forward orders and built safety stocks due to concerns about rising prices and supply disruptions. However, production was also affected by raw material shortages and shipping delays. The services sector also expanded at a faster pace than in March, though growth remained weaker than earlier in 2026. Firms cited support from technology investments and marketing efforts, but noted that global uncertainty and the war in the Middle East weighed on demand.

New orders were broadly stable, as gains in manufacturing offset a slight decline in services. Export demand saw some support from areas such as data centre demand and higher defence spending. Meanwhile, employment fell for the nineteenth consecutive month, although the pace of job cuts slowed to its weakest since October 2025. Manufacturing firms increased staffing for the first time since October 2024.

Cost pressures intensified sharply, with input price inflation reaching its highest level since November 2022. Around 69% of firms reported rising costs, driven by higher raw material, fuel and wage expenses. Companies passed on these increases to customers, pushing selling price inflation to its highest since February 2023.

Business confidence weakened to one of its lowest levels since December 2022, as firms remained concerned about rising costs, geopolitical tensions and their impact on demand and supply chains.

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