Preliminary May services PMI 52.9 vs 55.0 in April (Il Sole 24 Ore Radiocor) - London , 23 May - In May, the UK's purchasing managers' index for the manufacturing sector jumped to a 22-month high of 51.3 from 49.1 in April while that for the services sector fell to a six-month low of 52.9 from 55.0 the earlier month, according to preliminary data released by S&P Global.

The manufacturing output index rose to a 25-month high of 52.7 from 49.4 in April.

The composite output index, a weighted average of services PMI and manufacturing output, fell to a two-month low of 52.8 from 54.0 in April.

A reading above 50 signals expanding sector activity.

'The flash PMI survey data for May signalled a further expansion of UK business activity, suggesting the economy continues to recover from the mild recession seen late last year," said Chris Williamson, chief business economist at S&P Global Market Intelligence. "The survey data are consistent with GDP rising by around 0.3% in the second quarter, with an encouraging revival of manufacturing accompanied by sustained, but slower, service sector growth.

'The survey also brings welcome news of a cooling in service sector inflation, which is needed to open the door for the Bank of England to start cutting interest rates. A temporary surge in wage-related cost growth seen in April is showing signs of fading in May. Firms are also reporting that strong competition is limiting their scope to raise prices, especially in the face of weakened demand due to the elevated cost of living.

'With companies now reporting the slowest price growth in over three years, and headline inflation falling close to target, 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.

'Such speculation of rate cuts has already fed through to improved business confidence, with optimism for the year ahead lifting higher in May, adding to hopes that the battle against inflation can be won without the UK having suffered a serious recession.'.

AAA-Hob

(RADIOCOR) 23-05-24 10:47:46 (0294) 5 NNNN