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UK service sector showed ‘reasonable rate of expansion’ as inflation falls

5th Jun 24 4:22 pm

Last month growth in the UK’s services sector slowed as inflation fell to the lowest in three years.

According to the S&P Global UK services PMI survey, the sector scored 52.9 in May compared to 55.0 the month before, any reading above 50 shows the sector is growing.

The slowdown in prices could be positive news according to economists as the Bank of England could lower interest rates this month.

Joe Hayes, principal economist at S&P Global Market Intelligence, said: “The PMI survey for May showed another reasonable rate of expansion in the UK service sector.

“Taken in tandem with our earlier-released manufacturing survey, the PMIs imply GDP (gross domestic product) growth of around 0.3% so far in the second quarter.

“Of particular interest to the immediate outlook for the UK economy will be the prices measures, with the Bank of England potentially moving to cut interest rates as soon as this month.

“The PMI surveys show prices for UK services rising at the slowest pace for over three years.”

Rob Wood, chief UK economist at Pantheon Macroeconomics, said: “The PMI continues to suggest robust growth, despite slipping back in May.

“The big news in the May PMI, however, was further signs of easing inflation pressure.

“The PMI suggests April’s blowout services inflation print was a flash in the pan and should not be taken as a sign of strong annualised inflation continuing.”

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