UK services PMI jumps to 51.0 in May, a big beat (GBP holds the upside)

The UK services sector activity accelerated sharply in the month of May, the latest survey report from Markit Economics showed this Wednesday.

The headline seasonally adjusted IHS Markit/CIPS UK Services PMI Index rose to 51.00 in May vs. 50.4 booked in the previous month while beating expectations (50.6 expected) by a big margin.

Key Points:

Modest increase in business activity.

New work rises for the first time since December 2018.

Slowest rise in input costs for 12 months.

Chris Williamson, Chief Business Economist at IHS Markit, which compiles the survey, noted:

“Although service sector business activity gained a little momentum in May, with growth reaching a three-month high, the pace of expansion remained disappointingly muted and failed to offset a marked deterioration in manufacturing performance and a fall in output of the construction industry during the month. As a result, the PMI surveys collectively indicated that the UK economy remained close to stagnation midway through the second quarter as a result, registering one of the weakest performances since 2012.”

“Companies reported that activity, order books and hiring were all subdued by a combination of weak demand – both in domestic and overseas markets – and Brexit-related uncertainty.”