March PMI falls to six-month low! UK private sector growth almost stagnates, stagflation alarm sounded.

A survey showed that in the first month of the outbreak of the Iran war, the growth of the private sector in the UK stagnated, indicating a sudden loss of economic growth momentum and highlighting the escalating threat of "stagflation". The Standard & Poor's Global Purchasing Managers' Index (PMI) for March fell to a six-month low of 50.3, significantly lower than the previous value of 53.7, and well below the previous estimate of 51 - although the index still remains above the 50 mark, theoretically representing economic expansion, it has actually released a signal of stagnation. This month's service sector PMI recorded the slowest growth in eleven months and the fastest rise in costs, which is in line with the deteriorating trend shown by the manufacturing PMI last week. Business feedback indicates that both consumers and businesses have tightened spending due to the conflict in the Middle East. Economists point out that the UK's economic growth for the fourth quarter of 2025 has already weakened to 0.1%, and the current PMI data further raises the risk of recession. Thomas Pugh, Chief Economist at RSM UK, bluntly stated: "The final PMI data for March released this morning clearly points to the fact that even if the conflict ends quickly, the UK will still face a new round of stagflation; if the conflict continues for a longer period, the risk of recession will increase significantly." At the beginning of the year, the UK economy was showing a steady but subdued trend, but the attacks by the US and Israel on Iran caused energy prices to soar and market confidence to collapse, completely disrupting this momentum. In recent weeks, many forecasting agencies have significantly lowered their growth expectations for the UK, while the market is betting that the Bank of England will raise interest rates to curb the threat of inflation. The survey shows that new orders in the service sector have plummeted at the fastest rate since July last year, and export sales have declined for the first time this year. Specifically, 40% of service sector businesses reported a rise in costs in March, while only 2% reported a decrease. Standard & Poor's analysis points out that businesses are facing double pressure: on one hand, rapid wage growth, and on the other hand, suppliers are trying to pass on the rising costs of raw materials (such as fertilizers, chemicals, plastics) and energy and transportation to consumers. Tim Moore, Director of Global Market Information Economics at Standard & Poor's, emphasized: "The risk of stagflation has further intensified. The final service sector PMI data shows that both slowing growth and cost pressures exceed previous flash estimates. Many businesses also mention that suppliers are trying to pass on the pressure of rising costs of energy, raw materials, and transportation."