Source: Sharecast
The S&P Global UK services PMI business activity index came in at 49.3, down on April’s 52.7 and the first reading below the neutral 50.0 benchmark since April 2025. A reading above 50.0 suggests growth while one below indicates contraction.
The decline was less steep than feared, with most economists expecting a reading of 47.9.
But it still weighed on the composite PMI, which fell to 49.7 from 52.6. The composite PMI is a weighted average of the manufacturing and services indices. The manufacturing PMI, published earlier this week, was 53.9.
Respondents to the services survey said increased risk aversion among clients was weighing on demand alongside budget pressures, with input prices rising sharply. More subdued consumer spending was also noted, especially around the travel, tourism and leisure sector.
War in the Middle East, which broke out at the end of February, has sent global energy prices soaring, reigniting inflation fears, dampening interest rate expectations and weighing heavily on consumer sentiment.
Tim Moore, economics director at S&P Global Market Intelligence, said: "UK service sector companies signalled a reversal of fortunes in May. Subdued business and consumer demand, across both domestic and overseas markets, was cited as holding back performance.
"Many companies noted that the Middle East conflict had an adverse impact on sales pipelines and general business prospects.
"Worries about a prolonged spike in inflationary pressures, combined with elevated geopolitical tensions and subdued demand, continued to weight on business activity expectations."
