GROWTH of the UK’s key services sector slowed sharply in May and retail sales value last month was up only marginally on a year earlier, surveys show, fuelling worries over the flagging economy.
The Chartered Institute of Procurement & Supply’s business activity index for UK services fell from 55.8 in April to 53.8 in May on a seasonally-adjusted basis, to signal the sector’s weakest expansion since February. The all-sector purchasing managers’ index (PMI) from CIPS, which covers manufacturing, construction and services, fell from 55.9 in April to a three-month low of 54.5 in May.
Chris Williamson, chief business economist at CIPS survey compiler IHS Markit, said: “The UK PMI surveys indicate the economy is likely to regain some momentum in 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.”
UK economic growth in the first quarter was late last month revised down from 0.3 per cent to just 0.2 per cent.
IHS Markit forecast growth of 0.4 per cent in the second quarter. Such an outturn would be way adrift of the UK’s longer-term average rate.
A separate survey today shows UK retail sales value in May was up by just 0.2 per cent on the same month of last year. Excluding distortions related to the timing of Easter, this is the weakest year-on-year growth in retail sales value since January.
BRC chief executive Helen Dickinson said: “May’s sales slowdown is indicative of a longer-term trend of a decline in consumer spending power. As household budgets become increasingly squeezed by inflation, predominantly in the non-retail part of the consumer basket, it’s vital that the next Government helps retailers keep prices low for ordinary shoppers.
“This means, as well as securing a tariff-free trade deal with the EU, negotiating frictionless customs arrangements, providing certainty for EU colleagues working in the UK, and ensuring the continuity of existing EU legislation as it transfers into UK law.”
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