UK May flash services PMI 52.9 vs 54.7 expected

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• Services PMI 52.9 vs. 54.7 expected and 55.0 prior.
• Manufacturing PMI 51.3 vs. 49.5 expected and 49.1 prior.
• Composite PMI 52.8 vs. 54.0 expected and 54.1 prior.

Key Findings:

• Flash UK PMI Composite Output Index at 52.8 (Apr:
  54.1). 2-month low.
• Flash UK Services PMI Business Activity Index at
  52.9 (Apr: 55.0). 6-month low.
• Flash UK Manufacturing Output Index at 52.7
  (Apr: 49.4). 25-month high.
• Flash UK Manufacturing PMI at 51.3 (Apr: 49.1).
  22-month high.

Comment:

Commenting on the flash PMI data, Chris Williamson,
Chief Business Economist at S&P Global Market
Intelligence said:

“The flash PMI survey data for May signalled a further
expansion of UK business activity, suggesting the
economy continues to recover from the mild recession
seen late last year. The survey data are consistent with
GDP rising by around 0.3% in the second quarter, with an
encouraging revival of manufacturing accompanied by
sustained, but slower, service sector growth.

“The survey also brings welcome news of a cooling in
service sector inflation, which is needed to open the door
for the Bank of England to start cutting interest rates. A
temporary surge in wage-related cost growth seen in April
is showing signs of fading in May. Firms are also reporting
that strong competition is limiting their scope to raise
prices, especially in the face of weakened demand due to
the elevated cost of living.

“With companies now reporting the slowest price growth in
over three years, and headline inflation falling close to
target, the PMI data support the view that the Bank of
England will start cutting interest rates in August providing
the data continue to move in the right direction over the
summer.

“Such speculation of rate cuts has already fed through to
improved business confidence, with optimism for the year
ahead lifting higher in May, adding to hopes that the battle
against inflation can be won without the UK having
suffered a serious recession.”