- Prior 46.9
- Final Composite PMI 48.8 vs 48.6 prelim
- Prior 48.4
Key findings:
- Service sector remains in contraction in May, but expectations rebound
- Business activity falls for second month running, albeit at a slower pace
- Expectations for activity in the next 12 months rebound from April's low
- Output price inflation eases despite persistent strong cost pressures
Comment:
Phil Smith, Economics Associate Director at S&P Global Market Intelligence:
"The service sector remained mired in contraction territory in May, thereby raising the prospect of the overall economy also slipping into contraction in the second quarter following a solid growth performance in the opening three months of the year.
"Demand for services continues to be stifled by a squeeze on spending power from the increased cost of energy and heightened levels of uncertainty, although, encouragingly, the rates of decline in business activity and new work eased, offering hope that any downturn in the economy in Q2 would be only modest.
"Services firms reported much greater optimism about the outlook than a month ago, perhaps reflecting increased hopes of an end to the Middle East conflict as well as support to the economy from government policies, though it's notable that confidence hasn't fully returned to the level seen before the war began.
"Inflationary pressures in the service sector remain elevated, but they have at least steadied. Services firms found it more difficult to raise prices in May amid reports of some pushback from clients, which points to a growing pressure on company margins. Whilst we are seeing some job losses in the service sector as firms retrench in the face of the current challenging environment, the rate of decline in employment remained modest in May and even eased slightly from the month before."
