The latest PMI data from the UK indicates a deceleration in the service sector for May, with the Services PMI dropping to 52.9 from April’s 55.0, marking the slowest growth rate since November. The Composite PMI, which aggregates both services and manufacturing, also experienced a downturn, finishing at 53.0 compared to 54.1 the previous month.
Joe Hayes, Principal Economist at S&P Global Market Intelligence, provided insights into the broader implications of these figures, stating that the PMI survey reflected a “reasonable rate of expansion” in the UK service sector. Coupled with data from the manufacturing sector, the PMIs collectively suggest an approximate GDP growth of around 0.3% for the second quarter.
A significant development from the PMI surveys is the moderation in price increases for UK services, which have risen at the slowest pace in over three years. This marks the third consecutive month of diminishing selling price inflation in the service sector, a trend that will likely be welcomed by BoE. According to Hayes, this trend suggests that “the trajectory of services prices is moving in the right direction,” potentially easing concerns about persistent inflationary pressures.
