United Kingdom: Composite PMI hits record high in May
The IHS Markit/CIPS Composite Purchasing Managers’ Index (PMI) rose to 62.0 in May from April’s 60.7. May’s result marked the best performance on record. As a result, the index moved further above the 50-threshold, signaling a faster improvement in business conditions compared to the previous month.
The uptick came on the back of an improvement in the manufacturing PMI, which rose from 60.9 in April to 66.1 in May. Manufacturing firms saw sharp rises in output, new orders and employment. Moreover, new exports rose as Brexit-related disruption eased. In addition, the services PMI increased from 61.0 in April to 61.8 in May, aided by the marked rollback of restrictions in recent weeks, which has seen non-essential shops and the hospitality sector reopen. New business volumes and backlogs of work increased at the fastest rate in over seven years.
On the implications of May’s reading, Chris Williamson, chief business economist at IHS Markit, commented:
“The UK is enjoying an unprecedented growth spurt as the economy reopens. […] Business confidence has meanwhile hit an all-time high as concerns about the impact of the pandemic continue to fade. The strongest upturns in demand were reported for hotels, restaurants and other consumer-facing services, though improvements were reported across the board in all sectors. The output and order book growth seen in May, and record level of business optimism, are consistent with GDP rising sharply in the second quarter and for strong momentum to be sustained through the rest of the year, albeit with the current quarter likely representing a peak in the growth rate.”