S&P Global’s latest flash PMI data shows UK private sector output falling for the first time since April 2025, with manufacturing growth standing out against a sharper downturn in services.
The Flash UK PMI Composite Output Index fell to 48.5 in May, down from 52.6 in April, moving below the 50.0 no-change mark and reaching a 13-month low. The services business activity index dropped to 47.9 from 52.7, its lowest level for 64 months, while the manufacturing output index rose to 52.4 and the manufacturing PMI held steady at 53.7.
Manufacturing’s relative strength was not built on broad confidence. S&P Global said goods producers reported a temporary uplift in demand as customers brought forward purchases ahead of price rises and possible supply disruption, with some additional demand linked to data centre rollouts. That helped production volumes grow at the fastest pace for three months, even as total new work across the private sector slipped.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said: “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.
“The May PMI data indicate that the economy contracted at a 0.2% quarterly rate, representing a marked contrast to the robust growth seen earlier in the year.”
The split between services contraction and manufacturing expansion gives the data a more complicated industrial reading than the headline index alone suggests. Factories were still increasing output, but order books were being supported by front-loading and stock building, conditions that can fade once customers have rebuilt inventories or absorbed near-term price risk.
Input cost inflation remained well above its long-run average, with 66% of manufacturers and 51% of service providers reporting higher cost burdens during May. Oil prices, transport bills, energy, metals, polymers, and wage pressures were all cited, while manufacturers reported the steepest increase in factory gate prices since July 2022.
Supply chains also remained under strain. Around 26% of the manufacturing survey panel reported worse supplier performance in May, compared with only 1% reporting an improvement. Concerns over raw material availability and future input costs contributed to the fastest accumulation of pre-production inventories since July 2022, while finished goods stocks also rose more quickly.
The labour market signal was weaker, with private sector payrolls falling for the twentieth successive month, driven by faster job shedding in services. Backlogs of work also fell again, suggesting limited pressure on capacity despite the temporary lift in manufacturing production.
Allica Bank said the manufacturing figures showed resilience, while warning that established manufacturers need better access to working capital as costs and demand conditions shift.
Gareth Anderson, Head of Business Management at Allica Bank, said: “Today’s PMI data is a welcome indication that, while energy price inflation is weighing on the manufacturing sector, business so far remains resilient.
“To ensure this remains the case, it’s now vital that the more than 30,000 established manufacturing businesses out there get the support they need. These businesses are the foundation of the UK’s manufacturing and productive capacity yet are all too often overlooked by policymakers and financial services.”
With manufacturers facing higher input costs, supplier delays, and cash tied up in inventory, the next few months will test whether May’s factory performance was a genuine production base or a short-lived response to disruption. A sector can keep running on precautionary orders for a while, but eventually the warehouse tells the truth.
