Donald Trump’s tariff turmoil is already starting to damage the British economy with private sector output falling in April for the first time in 18 months, according to a key business survey.
The latest “flash” reading of the S&P PMI Composite Output Index showed a sharp fall in the reading from 51.5 to 48.2 this month. A reading of less than 50 denotes falling output.
Business reported lower demand from overseas markets with new work from abroad falling at the fastest pace in five years. Respondents are also concerned about subdued confidence in the domestic markets as confidence slumps.
Overall confidence levels are the lowest for two and a half years.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence said: “While recent months have been characterised by UK businesses treading water, broadly stagnating since last autumn’s Budget, businesses are reporting more of a struggle to keep their heads above water in April.
“April’s fall in output was the largest recorded for nearly two and a half years, consistent with GDP declining at a quarterly rate of 0.3%, reflecting falling activity and demand across both manufacturing and services.
“Job cutting remains aggressive as business optimism about the year ahead sank to a two-and-a-half-year low, and one of the lowest levels yet recorded by the survey, even surpassing the low seen in the immediate aftermath of the Brexit vote in 2016. 2
Alex Kerr, UK economist at forecaster Capital Economics, said: “The marked fall in the composite PMI in April raises the chances that the uncertainty stemming from the US tariffs chaos will be a bigger drag on the UK economy than we expect. “
Thomas Pugh, economist at consulting firm RSM UK said: “It looks like the budding spurt of growth in Q1 has already been cut short. The sharp drop in the composite PMI to 48.2 in April, the lowest since November 22, is the first clear sign of the impact of the US tariffs and associated huge increase in uncertainty is having on the UK economy.
“What’s more, it will make for dismal reading at the Bank of England with clear signs of inflation pressures rising and growth faltering.
“The April PMIs are the first bit of data we have had since President Trump announced his new tariff regime and it does not make for pretty reading. The composite PMI showed sharp falls in the output, new orders and future output indices indicating that businesses are battening down the hatches in response to tariffs and the associated uncertainty; and that they don’t expect things to get better any time soon.”
