UK services growth picks up in May, but still subdued

UK services growth picked up in May but remained subdued, according to figures released on Friday.

The Markit/CIPS services purchasing managers’ index rose to 53.5 from April’s 38-month low of 52.3, beating expectations for a reading of 52.5.

Although this indicated a slightly stronger rate of growth in UK services output, growth remained weak in the context of the current upturn and the historic survey trend.

The stronger rise in total activity in May occurred despite new business growing at the slowest rate of the current 41-month sequence of expansion. Meanwhile, volumes of outstanding business fell for the second month running.

Chris Williamson, chief economist at Markit, said: “The pace of UK economic growth lifted slightly higher in May, but remained close to the weakest seen over the past three years. Employment growth, backlogs of work and inflows of new business meanwhile all showed deteriorating trends, in many cases linked to growing uncertainty regarding the UK’s possible exit from the European Union.”

He added: “The average PMI reading of 52.4 over the past two months is also down from 54.2 in the first quarter and points to gross domestic product growth of just 0.2% in the second quarter, down from 0.4% in the opening quarter of the year."