The Courier & Advertiser (Fife Edition)
Growth falls as inflation affects firms
British businesses saw growth slow dramatically this month and it looks set to undershoot expectations, according to an influential survey.
The S&P Global/CIPS Flash United Kingdom Purchasing Managers Index (PMI) hit 51.8 in May, a 15-month low and down from 58.2 in April.
Analysts had expected the figure to hit 56.5 according to a consensus provided by Pantheon Macroeconomics.
Anything above 50 is considered growth.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said the figures signalled a “severe slowing” in the economy in May and hinted that “worse is to come”.
He added: “The survey data therefore point to the economy almost grinding to a halt as inflationary pressure rises to unprecedented levels.”
The early data for May showed that firms witnessed the fastest rise in operating expenses since the index was launched in January 1998 amid rampant inflation.
Companies in the services sector signalled a sharp loss in momentum during the month, with a reading of 51.8 following a 58.9 figure in April.
Survey respondents noted that economic and geopolitical uncertainty put the buffers on client demand.
Duncan Brock, group director at Chartered Institute of Procurement & Supply (CIPS), said: “The fear is that the squeeze on household incomes could potentially starve the sector of further bookings as rising costs in energy, food and fuel dominate consumer thinking.”
Meanwhile, the manufacturing sector also reported a slowdown in activity, with a reading of 54.6 in May, compared with 55.8 in April, representing a new 16-month low.