Key findings:
Marginal increase in business activity Business optimism rebounds to a seven-month high New work and employment continue to declineComment:
Tim Moore, Economics Director at S&P Global Market Intelligence, said:
"The service sector regained its poise in May as receding concerns about US tariffs, recovering global financial markets and greater confidence among clients all helped to support output growth. Although only marginal, the upturn in service sector activity was stronger than first estimated in May.
"Output growth expectations for the year ahead also rebounded after April's tariff-related slump. Optimism reached its highest level since October 2024, which reflected forthcoming business investment plans alongside hopes of a turnaround in sales pipelines and improving domestic economic prospects.
"Prevailing demand conditions nonetheless remained challenging in May, as signalled by a sustained reduction in total new orders across the service economy. Survey respondents mostly cited cutbacks to discretionary business and consumer spending.
"Reduced workloads and pressure on margins from increased payroll costs meant that headcounts remained under close scrutiny. Aside from the pandemic, the current eight-month period of falling employment numbers is the longest streak since 2008-10.
"While rising wages were again the most commonly reported factor pushing up input prices, the overall rate of cost inflation eased from April's 21-month high. Softer cost inflation and intense competitive pressures contributed to the slowest rise in price charged by service providers since last October."
This article was written by Giuseppe Dellamotta at www.forexlive.com. Read More Details
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