The
S&P Global UK Composite Purchasing Managers' Index for the
services and manufacturing sectors fell to 52.8 in May from 54.1
in April, undercutting the median poll forecast for a much more
modest dip to 54.0. Readings above 50 denote an expansion in
activity.
The dominant services sector reported the weakest growth in six
months, more than outweighing a recovery in factories which had
their best month in almost two years.
Overall, the PMI pointed to a weakening of momentum in Britain's
economy after a strong start to 2024, when it exited a shallow
recession.
That will be unwelcome news for Sunak's Conservative Party,
languishing in opinion polls behind the opposition Labor Party.
Economic competence is at the heart of the prime minister's
pitch to voters.
S&P Global said the survey was consistent with economic output
growing at a quarterly rate of 0.3%, down from the
better-than-expected 0.6% expansion seen in the first quarter.
New orders expanded at the weakest pace so far this year.
The composite PMI's index of companies' cost pressures fell to
its lowest since October, after spiking in April when there was
a nearly 10% rise in Britain's minimum wage.
"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," said
Chris Williamson, chief business economist at S&P Global.
Investors, who pushed back bets on an early rate cut after
Wednesday's inflation data showed an unexpectedly small drop in
April, see a roughly 50% chance of a first rate cut in August,
and a quarter-point move is not fully priced in until November.
The services PMI fell to 52.9 in May from April's 11-month high
of 55.0 - far short of the Reuters poll consensus of 54.7.
The manufacturing PMI rose to its highest since July 2022 at
51.3, up from 49.1 in April, helped by rising output and new
orders.
(Editing by Hugh Lawson)
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