The UK’s private sector shrank for the second consecutive month in May, fuelling concerns that the economy’s strong start to the year could be reversed in the second quarter.
The S&P Global/CIPS purchasing managers’ index (PMI) — a key barometer of economic health — rose slightly to 49.4 in May from 48.5 in April, but remained below the crucial 50 threshold that separates growth from contraction. It marks the second-lowest reading in the past 17 months and underscores the fragile state of business conditions.
The PMI figures come just weeks after official data showed the economy had grown 0.7 per cent in Q1, its fastest pace in two years. But that momentum now appears to be stalling amid rising trade uncertainty, higher staff costs and persistent inflationary concerns, raising the prospect of a potential reversal in Q2.
While the UK’s services sector — which accounts for more than three-quarters of the economy — showed a modest rebound, with its PMI ticking up to 50.2 from 49.0, the manufacturing sector continues to deteriorate. Its PMI fell to 45.4, a two-month low, signalling the sharpest decline in output since October 2023.
Manufacturers have been particularly affected by the post-Brexit trade environment, delayed investment decisions, and cutbacks to non-essential spending. The report found that overall manufacturing production fell at its fastest rate in seven months.
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