United Kingdom flash Services PMI unexpectedly declines to 47.9 in May

The United Kingdom (UK) S&P Global Composite Purchasing Managers' Index (PMI) surprisingly declined in May. The Composite PMI has come in at 48.5;a figure below 50.0 is considered a contraction in the business activity. The overall PMI was expected to expand again, but at a moderate pace to 51.7 from April’s reading of 52.6.

The UK's overall business activity unexpectedly contracted due to a significant weakness in the services sector activity. The Services PMI declined to 47.9, which was estimated to expand at a moderate pace to 51.8 from the previous reading of 52.7. The Manufacturing PMI remains steady at 53.7, while it was estimated to be lower at 53.0.

"The UK economy is facing a perfect storm, as rising political uncertainty adds to the growing impact from the war in the Middle East. Businesses are reporting falling output, surging inflation, supply shortages and job cuts in May," Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said.

Market reaction

There seems to be a negative reaction by the British Pound after the UK flash PMI data release; however, it appears to be majorly driven by a slight recovery in the US Dollar (USD), and not the domestic data. As of writing, GBP/USD trades flat around 1.3435.