PMI increased to a three-month high of 51 in May from 50.4 in April

This article is more than 1 year old

This article is more than 1 year old

Britain’s services sector failed to keep the economy afloat last month, registering a modest increase in activity that was not enough to offset falling output in the manufacturing and construction sectors.

The IHS Markit purchasing managers index (PMI) for the services sector, which mainly covers business-to-business activity, increased to a three-month high of 51 in May from 50.4 in April, following a rise in domestic orders. A figure above 50 indicates growth.

IHS Markit said a combination of the services, manufacturing and construction sector surveys indicated that the economy was at its weakest since 2012.

To emphasise the point, the figures showed that a year-long slump in export orders persisted in May, highlighting the difficulties UK exporters are facing as Brexit uncertainty continues through the summer.

The PMI showed that new export business began to shrink last September and has failed to recover since then. In May the index showed that new business exports stood at 48.2.

A global slowdown in trade on the back of the tit-for-tat trade war between the US and China is also understood to have played a part in the general slowdown in export activity.

Chris Williamson, the chief business economist at IHS Markit, described the sector as having little momentum, with companies reporting that “activity, order books and hiring were all subdued by a combination of weak demand – both in domestic and overseas markets – and Brexit-related uncertainty”.

“Although service sector business activity gained a little momentum in May, with growth reaching a three-month high, the pace of expansion remained disappointingly muted and failed to offset a marked deterioration in manufacturing performance and a fall in output of the construction industry during the month,” he said.

“As a result, the PMI surveys collectively indicated that the UK economy remained close to stagnation midway through the second quarter as a result, registering one of the weakest performances since 2012.”

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Staffing levels rebounded in May after a drop in employment in April, though the rate of job creation remained modest.

The survey indicated that higher job numbers were linked to firms pressing ahead with long-term business expansion plans and efforts to boost operating capacity, the report said.

Earlier this week the manufacturing PMI tumbled from from 53.1 points in April to 49.4 in May, while the construction PMI showed the sector contracted in May after a mild recovery earlier in the year.