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May sees dip in services activity

By Staff Reporter

Activity in the services sector eked out its slowest growth since February and came in shy of expectations as inflation and general election uncertainty took its toll last month.

The closely watched Markit/CIPS services purchasing managers' index (PMI) fell to 53.8 in May, down from 55.8 in April and below economists' expectations of 55.0.

A reading above 50 indicates growth. The powerhouse industry, accounting for 78% of the UK economy, saw output ease back from April's four-month high after demand for new orders slipped.

The drop was triggered by a squeeze on household spending following the rise in the cost of living, while clients also put decisions on pause ahead of the general election result.

It comes after PMI reports for the manufacturing and construction industries beat expectations for May after delivering solid performances.

Chris Williamson, chief business economist at IHS Markit, said: "Despite slower growth in May, the surveys indicate that the economy has regained some momentum in the second quarter."

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