Financial News: UK Services Activity Returns To Expansion Zone

UK Services Activity Returns To Expansion Zone

06/04/2025 - 08:04:00 (RTTNews)

(RTTNews) - The UK service sector logged a renewed upturn in May amid rising confidence among clients along with receding concerns about US tariffs, final purchasing managers' survey data from S&P Global showed on Wednesday.

The services Purchasing Managers' Index climbed to 50.9 in May from April's 27-month low of 49.0. A reading above 50 indicates expansion. The score was above the initial estimate of 50.2.

The survey revealed that an increase in business activity generally cited the impact of improved business optimism after the US tariff-related slump seen in April.

Apart from that, the overall increased output levels were boosted by resilient consumer confidence, new marketing initiatives, and competitive pricing strategies.

New orders continued to decline in May due to lackluster demand conditions in both domestic and overseas markets despite a boost to client confidence from the rollback of US tariffs. However, the rate of decline has eased since April.

There was a lack of pressure on business capacity as backlogs of work declined at the fastest pace since February. Firms reduced workforce numbers amid rising payroll costs.

On the price front, input price inflation remained sharp in May, linked to higher minimum wage rates and ongoing efforts by suppliers to pass on increased National Insurance contributions. Meanwhile, competitive pressures forced firms to increase selling prices at the slowest pace in seven months.

Looking ahead, business confidence showed a significant rebound in May, with the degree of positive sentiment rising to the strongest since October 2024, boosted by fewer concerns regarding the impact of US tariffs despite ongoing concerns about rising political uncertainty at home and abroad.

The composite output index rose to 50.3 in May from 48.5 in April, indicating a slight recovery in the British private sector economy.

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