Surveys show economy dampened by service sector slowdown

Chris Williamson, chief business economist at IHS Markit, has commented on the group’s UK Purchasing Managers’ Index survey results for May.

He said: “The surveys indicate that the economy is likely to regain some momentum during the second quarter after a sluggish start to 2017. However, a slowing in May poses some downside risks to the near-term outlook and is consistent with expectations of the economy only eking out modest growth.

“Solid employment growth continued to be recorded in May, although firms remained cautious about the outlook. Optimism is running below the recent long-run average, weighed down principally by concerns over Brexit, political uncertainty and weaker spending by households.

“Continuing the trend seen in recent months, consumer-focused businesses reported the slowest growth. However, the latest survey data also showed that input cost pressures have eased, suggesting consumer price inflation may likewise cool later this year, alleviating some of the squeeze on household budgets from higher prices.”