4th Jun 2025 09:59
(Alliance News) - UK service sector activity returned to stronger-than-expected growth in May, but pressures on margins from increased costs, and a long streak of falling employment numbers persist.
The S&P Global UK services purchasing managers' business activity index rose to 50.9 points in May from 49.0 in April, improving upon the flash reading of 50.2 released late last month. Climbing above the neutral 50-point mark separating growth from contraction, it indicates activity in the UK service sector returned to growth in May.
S&P Global said: "May data indicated another decline in new order intakes across the service economy, although the rate of contraction eased since April and was only marginal. Lower volumes of new work were attributed to lacklustre demand conditions in both domestic and overseas markets, despite a boost to client confidence from the rollback of US tariffs."
The UK composite PMI also returned to growth with a reading of 50.3 points in May, up from 48.5 in April, also improving on the flash reading of 49.4 points.
S&P noted higher levels of service sector output contrasting with a "solid" fall in manufacturing output. It added that the data indicates a rebound in business optimism to its highest for six months despite weaker order books and cutbacks to staff hiring.
Tim Moore, economics director at S&P Global Market Intelligence, said: "The service sector regained its poise in May as receding concerns about US tariffs, recovering global financial markets and greater confidence among clients all helped to support output growth. Although only marginal, the upturn in service sector activity was stronger than first estimated in May."
However, he cautioned: "Reduced workloads and pressure on margins from increased payroll costs meant that headcounts remained under close scrutiny. Aside from the pandemic, the current eight-month period of falling employment numbers is the longest streak since 2008-10."
On Monday, S&P had reported that the PMI for manufacturing picked up to 46.4 points in May from 45.4 in April, though the sector remained in contraction. The reading topped the 45.1 point flash estimate.
The services PMI is compiled by S&P Global from responses to a questionnaire from a panel of around 650 service sector companies in the UK. The responses are collected between May 12 and 28.
By Tom Budszus, Alliance News slot editor
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