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The UK is seeing a ‘tale of two economies’, survey results from S&P Global showed on Tuesday, as the service sector grows while manufacturing contracts.
The headline seasonally adjusted S&P Global flash UK composite output index read 53.9 points in May, down from April’s 12-month high of 54.9 points. However, the reading remained above the crucial 50-point no-change threshold that separates growth from contraction.
‘The latest reading pointed to a solid expansion of private sector output that was broadly in line with the average since the series began,’ S&P said.
The UK flash services purchasing managers’ index stood at 55.1 points in May, up from 55.9 in April. By contrast, the flash manufacturing PMI slipped further into contraction to 46.9 points from 47.8.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said ‘the UK is seeing a tale of two economies, with the divergence between manufacturing and services posing difficulties for policymakers.’
Williamson added: ‘The UK economy enjoyed another month of strong growth in May, with the expansion continuing to be driven by surging post-pandemic demand in the service sector, notably from consumers and for financial services, with hospitality activities buoyed further by the Coronation.
‘However, this growth spurt is driving renewed inflationary pressures, as service providers struggle to meet demand and hence not only offer higher wages to attract staff but also find themselves able to charge more for their services.’
The composite PMI is complied by S&P Global from responses to questionnaires sent to survey panels of around 650 manufacturers and 650 services providers in the UK. Flash readings are calculated from around 80% to 90% of total responses. The data were collected between May 11 and 19.
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