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Financial News: UK Service Sector Growth Moderates In May

UK Service Sector Growth Moderates In May

06/05/2024 - 10:44:00 (RTTNews)

(RTTNews) - The UK service sector growth moderated in May as growth momentum in business activity and new orders softened from their 11-month highs reported in April, final survey data from S&P Global showed on Wednesday.

The S&P Global services Purchasing Managers' Index dropped to 52.9 in May, in line with the flash estimate, from April's 11-month high of 55.0.

The reading remained above the threshold 50.0 mark for a seventh straight month.

Incoming new business continued its current sequence of growth in May, thanks to successful marketing campaigns, greater client confidence and new customer wins. That said, the rate of expansion eased from April's near one-year peak.

New export business posted the slowest growth in the year-to-date and was only marginal.

A less marked improvement in sales has led companies to turn greater attention to their backlogs of work. Further, the depletion of outstanding orders was the fastest in three months.

Nonetheless, job creation extended the current sequence of hiring that commenced at the turn of the year. The rate of job creation was the fastest since February.

Service providers were strongly optimistic towards the year-ahead outlook in May. Companies cited lower interest rates and an improvement in domestic economy as reasons for their positive expectations.

On the price front, the survey revealed that input cost inflation was the slowest since February 2021. Prices charged for services increased due to sustained salary pressures, greater supplier charges and increases in fuel costs. However, the rate of output price inflation eased to its weakest for over three years.

The composite output index that combines manufacturing and services indices, posted 53.0 in May, down from April's one-year high of 54.1. The initial score for May was 52.8. Despite the slowdown, the score signaled a solid expansion in the private sector.

S&P Global Market Intelligence Principal Economist Joe Hayes said the survey showed another reasonable rate of expansion in the UK service sector.

"Taken in tandem with our earlier-released manufacturing survey, the PMIs imply GDP growth of around 0.3% so far in the second quarter," added Hayes.

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