The UK private sector showed decent growth in March 2025, but the continuous decline in employment attempts to overshadow this expansion. The flash PMI composite output Index rose sharply slightly to 52.0, signalling continued expansion in economic activity. While services activity strengthened (at 53.2, 1.9 points above the consensus forecast), manufacturing slumped further (to 44.6), 2.4 points below the consensus forecast and marking an 18-month low. New business fell as clients cut budgets and business investment stalled. Export orders also declined sharply, reflecting weaker demand from the EU and US and highlighting the effect of geopolitical uncertainty.

The combination of rising payroll costs, automation trends, and weak demand led to a steep decline in employment, though not as severe as in February. Inflationary pressures eased considerably from January's nine month high but remains higher than the long-term average, with service sector having much higher rise in price pressure than manufacturing. This was mainly due wage pressures and efforts by suppliers to pass on higher payroll costs.

Due to these challenges, business confidence remained close to January's 25-month low. Manufacturing saw the lowest degree of confidence since November 2022. Geopolitical uncertainty and macroeconomic headwinds continue to weigh on sentiment. Still this leaves the RPI at 25 and the RPI-P at 12 meaning that economic activities in the UK economy are well ahead of market expectations.

The manufacturing flash is expected nearly flat at a gloomy 47.0 with services unchanged but outperforming at 51.0.

The flash Composite Purchasing Managers’ Index (PMI) provides an early estimate of current private sector business activity by combining information obtained from surveys of the manufacturing and service sectors of the economy, around 650 companies in each case. The flash data are released around ten days ahead of the final report and are typically based upon around 75-85 percent of the full survey sample. Results covering a range of variables including manufacturing output, employment, new orders, backlogs and prices are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) activity versus the previous month and the closer to 100 (zero) the faster is activity growing (contracting). The report also contains flash estimates of the manufacturing and services PMIs. The survey is produced by S&P Global.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the purchasing managers' surveys, investors will know what the economic backdrop is for the various markets. The flash PMIs are particularly closely watched as they provide a wide ranging look at economic developments and some of the most up to date information available. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.