UK PMI services rose to 51.0 in May, up from 50.4 and beat expectation of 50.6. Markit noted there was modest increase in business activity. New work rises for the first time since December 2018. But there was slowest rise in input costs for 12 months. All Sector PMI Index dropped to 0.7, down from 50.9. A sharp slowdown in manufacturing production growth and lower construction output more than offset an improvement in service sector business activity.
Chris Williamson, Chief Business Economist at IHS Markit, which compiles the survey:
“Although service sector business activity gained a little momentum in May, with growth reaching a three-month high, the pace of expansion remained disappointingly muted and failed to offset a marked deterioration in manufacturing performance and a fall in output of the construction industry during the month. As a result, the PMI surveys collectively indicated that the UK economy remained close to stagnation midway through the second quarter as a result, registering one of the weakest performances since 2012.
“Companies reported that activity, order books and hiring were all subdued by a combination of weak demand – both in domestic and overseas markets – and Brexit-related uncertainty.
“On a brighter note, optimism about the year ahead picked up to an eight-month high, in part reflecting an easing of near-term concerns due to the extension of the Brexit deadline to 31st October. However, it is clear that many businesses remain cautious in relation to spending and investing in the uncertain political environment, which is exacerbating the impact of a wider global economic slowdown on the UK.”
