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PMIs: Modest dent to activity growth so far from Ukraine, but a bigger hit to optimism

24th March 2022

Commenting on today’s PMIs, Melanie Baker, Senior Economist at Royal London Asset Management said:

“The UK and euro area PMI business surveys, point to a modest dent in activity growth in March and a drop in business optimism as the Ukraine crisis has developed. Prior to this month, supply chain issues – and therefore potentially inflation pressures down the line, showed signs of improving in the survey. Though this continued in the UK, businesses worried about the coming months and in the euro area there were already signs of supply chain issues worsening.

“The survey continued to point, unsurprisingly, to significant pipeline inflation pressures with business still signalling very strong increases in input and output prices.

“Slower growth but higher inflation is not the most comfortable environment for central banks deciding on policy changes. For now though, the dent to activity signalled in these surveys does not look enough yet to stop either the Bank of England raising rates again or the European Central Bank raising rates later this year”.


The views expressed are those of the author at the date of publication unless otherwise indicated, which are subject to change, and is not investment advice.