Lloyds Tracker Shows Real Estate Rebound Drives Modest UK Sector Growth in March

Lloyds Tracker Shows Real Estate Rebound Drives Modest UK Sector Growth in March

(IN BRIEF) UK economic activity remained steady in March with four out of fourteen sectors reporting output growth, the same as February, according to Lloyds Bank’s UK Sector Tracker. Real estate services saw their first expansion of 2024, spurred by pre-emptive property purchases ahead of new Stamp Duty thresholds. Other growing sectors included food and drink manufacturing, software services, and financial services. While services expanded, manufacturing output declined in six out of seven subsectors. Cost pressures rose in ten sectors, driven by wage and material costs, prompting seven sectors to accelerate price increases. The UK Composite PMI rose to 51.5, signaling modest economic expansion amid continued efforts by businesses to manage costs and remain resilient.

(PRESS RELEASE) LONDON, 16-Apr-2025 — /EuropaWire/ — According to the latest Lloyds Bank UK Sector Tracker, four of the fourteen UK sectors monitored reported growth in output during March, maintaining the same level of activity seen in February. The report, which draws on PMI survey data from approximately 1,300 UK private sector firms collected between March 12 and 27, shows that despite persistent economic uncertainty, sector performance held firm month-on-month.

Real estate services saw their first expansion of the year, driven by a surge in property transactions ahead of adjustments to Stamp Duty Land Tax thresholds taking effect on April 1. Food and drink manufacturing, software services, and financial services were the other sectors registering output growth in March.

While the overall services sector benefited from increased activity in areas like finance and software, manufacturing continued to contract. Six of the seven manufacturing categories included in the Tracker experienced a decline in output.

Cost pressures remained a concern, with ten sectors reporting rising input costs in March, up from nine in February. Although the overall UK Composite PMI input cost index dipped slightly to 63.6, it remained marginally above the 2024 average of 60.7, indicating that inflationary pressures persist, particularly around staffing and material expenses.

In response to rising input costs, seven sectors raised their prices at a faster pace in March. Among those leading the increases were tourism and recreation, technology equipment, chemicals, and food and drink manufacturing, attributing price hikes to higher wage and material costs.

These performances contributed to a modest improvement in the UK Composite PMI, which rose to 51.5 in March from 50.5 in February—indicating overall economic expansion.

Nikesh Sawjani, Senior UK Economist at Lloyds Bank, noted: “Despite facing geopolitical and economic headwinds, UK sector output held firm in March. The fact that four sectors are now growing—up from just one at the beginning of the year—shows the commitment of businesses to increase efficiency, defend margins, and retain customer trust.”

Notes to editors

Output growth: Financial services (58.7), software services (57.7), real estate (55.1), food and drink manufacturing (50.1).

Output contraction: Commercial and professional services (49.3), industrial goods manufacturing (46.0), tourism and recreation (45.6), chemicals manufacturing (45.1), household products manufacturing (43.5), transportation (42.9), metals and mining (42.9), healthcare (42.4), technology equipment manufacturing (40.0), automobiles and auto parts manufacturing (37.3).

Growing demand, as measured by new orders: Software services (55.7), financial services (53.7).

Contracting demand, as measured by new orders: real estate (48.9), Commercial and professional services (46.9), food and drink manufacturing (46.3), industrial goods manufacturing (43.9), tourism and recreation (43.2), transportation (42.7), metals and mining (42.3), chemicals manufacturing (41.3), technology equipment manufacturing (41.1), household products manufacturing (39.5), automobiles and auto parts manufacturing (37.7), healthcare (35.0).

Methodology

The Lloyds UK Sector Tracker includes indices compiled from responses to S&P Global’s UK manufacturing and services PMI® survey panels, covering around 1,300 private sector companies.

The Lloyds UK Sector Tracker monitors the following 14 individual UK sectors: Chemicals, Metals & Mining, Automobile & Auto Parts, Beverages & Food, Household Products, Industrial Goods, Technology Equipment, Tourism & Recreation, Financial Services (this sector has been updated to include banks, insurance providers and other financial services firms), Commercial & Professional Services, Transportation, Software & Services, Healthcare and Real Estate.

Survey responses are collected in the second half of each month and indicate the direction of change compared to the previous month. A diffusion index is calculated for each survey variable.

The index is the sum of the percentage of ‘higher’ responses and half the percentage of ‘unchanged’ responses. The indices vary between 0 and 100, with a reading above 50 indicating an overall increase compared to the previous month, and below 50 an overall decrease. The indices are then seasonally adjusted.

The Purchasing Managers’ Index (PMI) survey methodology has developed an outstanding reputation for providing the most up-to-date possible indication of what is really happening in the private sector economy by tracking variables such as sales, employment, inventories and prices. The indices are widely used by businesses, governments and economic analysts in financial institutions to help better understand business conditions and guide corporate and investment strategy. In particular, central banks in many countries use the data to help make interest rate decisions. PMI surveys are the first indicators of economic conditions published each month and are therefore available well ahead of comparable data produced by government bodies.

For further information on the PMI survey methodology, please economics@spglobal.com

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Media Contact:

Lorna Gilmour
lorna.gilmour@lloydsbanking.com
020 7356 2374

SOURCE: Lloyds Bank plc