Chancellor Rachel Reeves is receiving mixed messages about the state of the º£½ÇÊÓƵ economy ahead of her Spring Statement, with S&P Global's purchasing managers' index (PMI) indicating a rise in services but a decline in manufacturing.
The Spring Statement is set to be delivered on Wednesday amidst escalating global trade war tensions and deepening concerns over impending tax increases, as reported by .
The latest S&P º£½ÇÊÓƵ PMI survey suggests that manufacturers are already feeling the impact of President Donald Trump's tariff threats on steel and aluminium, as weak demand has led to falling export sales.
In March, the º£½ÇÊÓƵ manufacturing PMI dropped further to 44.6, marking an 18-month low.
Input cost inflation continues to significantly exceed the long-term survey average, while manufacturers' confidence also continues to fall.
Rachel Reeves is not anticipated to unveil her complete industrial strategy until mid-year, although a specific plan for manufacturing may be introduced sooner.
The most recent data from S&P Global aligns with a series of surveys indicating a downturn in manufacturing.
Ben Jones, an economist at the Confederation of British Industry (CBI), attributes a decrease in manufacturing output at the start of the year to Rachel Reeves' £20bn increase to National Insurance, which is due to take effect next month.
Shadow Business Secretary, Andrew Griffith, commented on the PMI Manufacturing index's continued decline, stating: "Another day, another damning metric about the state of the º£½ÇÊÓƵ economy."
He added: "Today's manufacturing PMI shows the toll uncompetitively high energy costs and fears about Labour's jobs tax and Employment Rights Bill are having on º£½ÇÊÓƵ manufacturing businesses."
Despite this, there were some positive indicators for Reeves as the composite output index reached a six-month peak, with business activity comfortably surpassing the 50-figure mark that distinguishes growth from contraction.
However, economists at Capital Economics suggested that the data was "still consistent" with near-stagnant GDP growth in recent quarters. Rob Wood, chief º£½ÇÊÓƵ economist at Pantheon Macroeconomics, also indicated that the survey data pointed to the º£½ÇÊÓƵ's recent economic struggles.
"The PMI's surge in March shows that the economy has bottomed as firms digest the payroll tax hikes and fears of further tax rises this month fade," he said.
Private sector employment continued to decline, albeit not at the rapid rate observed in February.
The new survey provides Rachel Reeves with some "respite", according to Chris Williamson, chief business economist at S&P Global Market Intelligence. However, he also noted that the Chancellor should not rely solely on the survey.
"Just as one swallow does not a summer make, one good PMI doesn't signal a recovery," he said.
"The improvement is also being driven by only small pockets of growth, notably in financial services, with consumer-facing business and manufacturers continuing to struggle against headwinds both at home and abroad.
"These headwinds include the additional costs imposed on businesses in the Budget, low confidence among businesses and households, and sluggish demand at home and abroad, the latter linked to heightened geopolitical uncertainty resulting from US tariff policies."
