The latest figures from S&P Global say the UK economy is shrinking.
The headline Composite PMI Output Index fell sharply in May, according to the preliminary ‘flash’ reading, down from 52.6 in April to 48.5. Dropping below the 50.0 marks the difference between expansion and contraction.
The PMI [Purchasing managers’ index] signalled the first fall in output since April of last year, when the US tariff announcement caused a brief downturn. May’s decline matched that seen last April to represent the joint-sharpest fall in output since late 2022.
May’s flash PMI reading is consistent with the economy contracting at a 0.2% quarterly rate.
Chris Williamson, Chief Business Economist and an Executive Director at S&P Global Market Intelligence, said: “The UK economy is facing a perfect storm as rising political uncertainty adds to the growing impact from the war in the Middle East. Businesses are reporting falling output, surging inflation, supply shortages and job cuts in May.
“The May PMI data indicate that the economy contracted at a 0.2% quarterly rate, representing a marked contrast to the robust growth seen earlier in the year. The blame lies first and foremost with the war in the Middle East, though companies are also noting that domestic politics are taking an increasing toll, driving uncertainty higher, in turn deterring spending, hiring and investment.”
He went on to say that things could get worse in the coming months.
The decline was led by the service sector, where business activity fell at a rate not seen since the COVID-19 lockdown in January 2021, reversing a growth rebound seen in April.
