The UK private sector grew at the weakest pace in more than a year in May amid escalating inflationary pressures and heightened geopolitical uncertainty, flash survey results from S&P Global showed on Tuesday.
The Chartered Institute of Procurement & Supply composite output index fell sharply to 51.8 in May from 58.2 in April. The expected score was 56.5.
The pace of monthly fall was the fourth-largest on record. Nonetheless, a reading above 50.0 indicates expansion.
Service providers signaled the greatest loss of momentum in May as economic and geopolitical uncertainty contributed to a slowdown in client demand.
The services Purchasing Managers' Index slid to 51.8 in June from 58.9 a month ago. The score was forecast to drop moderately to 57.0.
The manufacturing PMI dropped to a 16-month low of 54.6 from 55.8 in the previous month. The reading was also below the flash 55.0.
"The UK PMI survey data signal a severe slowing in the rate of economic growth in May, with forward-looking indicators hinting that worse is to come," Chris Williamson, chief business economist at S&P Global Market Intelligence said.
The survey data point to the economy almost grinding to a halt as inflationary pressure rises to unprecedented levels, Williamson noted.
New orders grew at the weakest pace since the recovery from COVID-19 lockdowns began in March 2021. Export sales were also a drag on new work.
Despite a notable slowdown in new order growth, the latest survey indicated ongoing pressure on business capacity. Efforts to boost business capacity and catch up on unfinished work contributed to a strong growth in employment numbers at private sector firms.
On price front, the survey showed that average cost burdens increased strongly in May, with input price inflation hitting a fresh survey record. Despite a quicker rise in input costs, data highlighted a slight slowdown in prices charged inflation from the record high seen in April.
Finally, business expectations eased to the lowest for two years in May amid worries about the global economic outlook and downbeat projections for consumer spending.