UK private sector activity falls to more than two-year low amid Trump tariffs

Activity across the UK’s private sector has plunged to a more than two-year low as Donald Trump’s trade tariffs hammered exporters, according to new data.

The S&P Global flash UK composite purchasing managers’ index (PMI) reported a reading of 48.2 in April, up from 51.5 in March.

The flash figures are based on preliminary data. Any score above 50.0 indicates that activity is growing while any score below means it is contracting.

The latest reading was weaker than expected, with a consensus of analysts having predicted a reading of 50.5 for the month.

Low optimism

Survey respondents in both the factory and services sectors said weakening demand from abroad hit their business activity, with new international work falling at the fastest pace in nearly five years.

Employers also made job cuts across the economy in April, with staffing numbers falling for the seventh consecutive month.

Meanwhile, optimism for the year ahead fell to its lowest point since October 2022, with many survey respondents citing worsening conditions in the wake of US tariffs.

Manufacturers saw a fall in production for the sixth consecutive month with the latest decline the steepest since August 2022.

Slump

Chris Williamson, chief business economist at S&P Global Market Intelligence, said the survey result “reflects the impact of headwinds from both home and abroad”.

He said: “The biggest concern lies in a slump in exports amid weakened global demand and rising global trade worries, but higher staffing costs have also piled pressure on companies – linked to the National Insurance and minimum wage changes that came into effect at the start of the month.

“Just as export orders are falling at the sharpest rate since May 2020, during the pandemic lockdowns, firms’ costs spiked higher to a degree not seen for over two years.

“The collapse in confidence and drop in output during April raise red flags as to the near-term economic outlook and add pressure on the Bank of England to reduce interest rates again at its May meeting.”