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The pace of improvement of the UK private services economy slowed in May, purchasing managers’ index survey results from S&P Global data showed on Wednesday.
The seasonally adjusted services PMI business activity index fell to 52.9 points in May from 55.0 in April. Falling towards the 50-point mark separating growth from contraction, it indicates that UK business growth slowed. It was in line with the flash estimate from May 23.
The composite output index edged down to 53.0 points in May from 54.1 in April, indicating the pace of growth slowed. It however beat the flash estimate of 52.8 points.
S&P Global commented: ‘The rate of jobs growth accelerated across the UK private sector to a four-month high, reflecting greater hiring at services firms. Factory jobs dipped in May. Sustained employment growth coincided with an improvement in business confidence, which was well above its long-run average during May.’
S&P Global noted that price pressures were easing in the UK, amid the slowest increase in prices charged for over three years. It added that hiring activity was climbing but noted that labour market tightness was a constraint.
Regarding the slow increase in prices, Joe Hayes, principal economist at S&P Global Market Intelligence, said: ‘This will be very encouraging to the [Bank of England’s] Monetary Policy Committee and suggests the trajectory of services prices is moving in the right direction.’
He added: ‘It is worth noting however that the PMI’s gauge of UK services inflation is still sitting well above its pre-pandemic trend, which may give more weight to those suggesting the Bank of England hold out until August to loosen policy.’
On Monday, S&P Global had reported that the UK manufacturing sector returned to growth in May, according to its PMI survey.
The seasonally adjusted manufacturing PMI rose to 51.2 points in May from 49.1 in April. This was its highest reading since July 2022, but below an earlier flash estimate of 51.3 points.
It fell behind FXStreet-cited consensus, which was also 51.3 .
Nevertheless, manufacturing production expanded at the quickest rate since April 2022.
The services PMI is compiled by S&P Global from responses to questionnaires sent to a panel of around 650 service sector companies in the UK. The responses were collected between May 9 and 29.
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