The UK’s services sector shrank last month for the first time since October 2023 as concerns over trade tensions weighed on firms, according to new figures.
Service sector companies reported their weakest levels of new work from overseas for more than four years as recent US tariff plans caused caution globally across the sector.
The S&P Global UK services PMI survey scored 49.0 in April, down from 52.5 in March. It was the weakest reading for more than two years.
Any reading above 50 means the sector is growing while a score below means it is contracting.
The monthly reading was below the 49.9 level predicted by economists.
Tim Moore, economics director at S&P Global Market Intelligence, said: “UK service sector output slipped into contraction for the first time in one-and-a-half years as heightened business uncertainty weighed on order books during April.
“Export conditions were particularly weak, with new business from abroad falling to the greatest extent since February 2021.
“Survey respondents often commented on the impact of global financial market turbulence in the wake of US tariff announcements.”
He added that businesses in the technology and financial service sector highlighted “risk aversion and delayed spending decisions among clients”.
President Donald Trump announced wide-ranging tariffs at the start of the month, although many services are expected to be exempt from the import tax.
The latest industry figures showed that new business decreased in April for the third time in the past four months.
Businesses highlighted continued to report “unfavourable domestic demand conditions” but stressed that a marked decline in overseas markets was the main cause of recent weakness.
Reduced workloads and delayed spending conditions also resulted in cautious hiring activity, the research found.