The UK economy displayed notable resilience in April, with eight out of 14 monitored sectors experiencing output growth or expansion, despite increased cost pressures affecting every industry, including financial services, according to the latest Lloyds Bank UK Sector Tracker.

While one fewer sector reported output growth compared to March, the number of sectors experiencing demand growth remained steady at seven.

This resilience is significant given the widespread rise in costs, marking the first time since December 2022 that all sectors have faced such pressure.

Financial services output expansion

Financial services led the way with the fastest output expansion, scoring 61.6 on the output index compared to 56.2 in March.

Software services and commercial and professional services followed, with indices of 55.3 and 53.3, respectively.

This growth was largely driven by stronger customer demand, as indicated by increased new orders.

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Despite the robust performance in several sectors, cost pressures were felt across the board.

All 14 sectors saw costs rise, with manufacturers and service sector businesses particularly affected by higher staff costs.

Manufacturers also faced significant shipping costs, while the tourism and recreation sector experienced the sharpest rate of input cost inflation, jumping from 69.6 in March to 77.9 in April.

In response to these cost increases, 13 of the 14 sectors raised their prices, the highest number since January 2024.

Food and drink manufacturing was the only sector to reduce prices, though at a slower rate than the previous month.

Nikesh Sawjani, senior UK Economist at Lloyds Bank, commented: “This month’s data suggests that the economy entered Q2 on solid footing. Historically, when more than half of sectors start the quarter in growth mode, GDP tends to hold steady or grow. However, the ongoing cost pressures will be closely monitored by the Bank of England, as sustained increases may force more businesses to raise prices, impacting the overall inflation outlook.”

Scott Barton, managing director at Lloyds Bank Corporate and Institutional Banking expressed: “It’s a testament to firms’ strength and flexibility that so many sectors are achieving growth despite challenging conditions. Moving forward, management teams will need to focus on supply chain performance, inventory, pricing strategy, and working capital to navigate these headwinds and seize new opportunities.”

The April results from the Lloyds Bank UK Sector Tracker indicate that, despite facing significant cost pressures, the UK economy remains sturdy, providing a cautiously optimistic outlook for Q2.