UK: Services PMI posted an unexpectedly strong gain - TDS

Research Team at TDS, notes that the UK’s May services PMI posted an unexpectedly strong gain in May, rising to 53.5 against consensus of a small tick up, but the headline masks a weaker underlying report.

Key Quotes

“Firms maintained a positive outlook for activity, but this was framed conditionally on a Remain win in the referendum, and evidence of uncertainty was strong, with new business growing at its slowest rate in 41 months as firms delay spending plans until June 24th.

Volumes of outstanding business fell again in May, showing the first consecutive decline in over three years. Jobs growth, while positive, showed the slowest growth in over three years. In a separate part of the survey, over 28% of respondents noted that the referendum was having a detrimental impact on their business, but 51% of firms said they remained relatively unaffected.”