UK manufacturing sector rebound in May – PMI

Britain’s hard-pressed manufacturing sector rebounded in May, a closely watched survey showed on Thursday.

The latest S&P Global UK manufacturing PMI was 51.3, down from 49.1 in April and the highest level in 22 months. The manufacturing index also turned positive, reaching a 25-month high of 52.7 from April’s 49.4.

A reading below the neutral 50.0 indicates a decline, while above it suggests an increase.

As S&P Global noted, this increase was the second recorded in three months after a long period of declines. It found that respondents often linked higher production to stronger customer demand, as well as emerging signs of recovery in both export sales and inventory purchases.

However, while the UK services sector PMI business activity index remained positive at 52.9, it was down from April’s level of 55.0.

As a result, the UK’s composite manufacturing PMI was 52.8, down from April’s 54.1.

Chris Williamson, the company’s chief economist S&P Global Market Intelligencepreliminary data suggests that the economy continues to recover from the recession.

He continued: “The survey data is consistent with GDP growth of around 0.3% in the second quarter, with an encouraging recovery in manufacturing, accompanied by sustained, if slower, growth in services.

“With companies now seeing their slowest price growth in over three years and headline inflation falling close to target, the data supports the view that the Bank of England will start cutting interest rates in August – provided data continues to move in the right direction in the summer. “

Joshua Mahony, Chief Market Analyst at Range marketsstated: “In the UK, PMI saw an unexpected rebound in the manufacturing sector, with the sector entering expansion territory for the first time in almost two years.

“Unfortunately, this strength has waned in the face of a sharp slowdown in services growth in the UK, which has led to a renewed decline in total value.

“With today’s report showing particular weakness in factor prices in the services sector, bulls can take comfort in the disinflationary impact of today’s PMI survey.”

Peter Arnold, EY The UK’s chief economist said: “PMIs often fluctuate from month to month, while the strength of the balance over the last month actually looked like an outlier compared to other indicators, so the EY Item Club does not consider May’s weaker result as problematic.

“Another interesting change was the weakening of the cost-price balance. Input cost inflation was the weakest in seven months, while manufactured goods prices rose at the slowest pace since February 2021, with the services sector being the source of weakness for both sectors.

PMI data was collected between May 9 and 21. Questionnaires were sent to panels of approximately 650 manufacturers and 650 service providers.