LONDON, March 24 (Xinhua) -- Business activity in the UK has slowed to a six-month low in March, while cost pressures surged sharply, as escalating tensions in the Middle East weighed on demand and disrupted supply chains, a closely watched survey showed on Tuesday.
The S&P Global Flash UK Composite Purchasing Managers' Index (PMI) fell to 51.0 in March from 53.7 in February, signalling only marginal expansion in private sector output.
The slowdown was broad-based. The services activity index dropped to 51.2 from 53.9, while manufacturing output edged down to 50.1 from 52.5, close to stagnation. A reading above 50 indicates growth. The headline manufacturing PMI came in at 51.4, a three-month low.
Survey data showed that new business declined for the first time in four months, reflecting weaker confidence among firms and consumers. Companies widely linked the deterioration in demand to the Middle East conflict, citing heightened uncertainty, rising prices and more cautious spending.
At the same time, cost pressures intensified markedly. Input price inflation rose to its highest level in more than three years, driven by higher fuel, transportation and raw material costs. Manufacturing firms reported the sharpest increase in input costs since October 2022, with the pace of acceleration the strongest in decades.
Rising costs were increasingly passed on to customers, leading to the fastest increase in output prices since April 2025. The combination of slowing growth and rising prices points to mounting inflationary pressure across the economy.
External demand also weakened. Export orders declined, particularly in the services sector, amid reduced international travel and delays to projects linked to the Middle East. Meanwhile, supply disruptions, including longer shipping routes and production stoppages in energy-related industries, led to extended delivery time and lower inventories.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said the Middle East conflict has "stalled growth while driving inflation sharply higher," as firms face weaker demand alongside rising energy and supply chain costs.
He added that the Bank of England now faces a difficult trade-off between containing inflation and avoiding further damage to growth, warning that "downside risks to growth and upside risks to inflation have already materialised."
The flash PMI survey, conducted between March 12 and 20, provides an early snapshot of economic conditions and is closely watched by markets and policymakers. ■
