A rapid collapse in the UK’s private sector has slowed this month, according to new preliminary data to measure the economy.
Private sector output is still falling rapidly, but at least performed better than in April, its worst month on record.
The IHS Markit/CIPS Flash UK composite purchasing managers’ index (PMI), a closely watched measure, rose to 28.9 in May, from 12.9 at the same point in April.
It does not show any growth in the economy, as any score below 50 is considered a contraction, however the figures are an indication that businesses have put the brakes on their decline.
Even some heavy discounting by companies did little to offset ... lossesDuncan Brock, CIPS
The contraction is still far deeper than the worst point of the financial crisis, November 2008, when the PMI measured 38.1.
“The UK economy remains firmly locked in an unprecedented downturn, with business activity and employment continuing to slump at alarming rates in May,” said IHS chief business economist Chris Williamson.
“Although the pace of decline has eased since April’s record collapse, May saw the second largest monthly falls in output and jobs seen over the survey’s 22-year history, the rates of decline continuing to far exceed anything seen previously,” he said.
Hotels, restaurants and clothes makers were the hardest hit once again, however few companies have escaped from the effects of the virus.
Amid several data shocks, experts have begun to warn that the economic recovery is unlikely to be “v-shaped”.
On Tuesday Chancellor Rishi Sunak said an immediate bounceback was “not obvious”.
The sentiment was echoed on Thursday by Mr Williamson who said: “The UK looks set to see a frustratingly slow recovery, given the likely slower pace of opening up the economy relative to other countries which have seen fewer Covid-19 cases.”
CIPS group director Duncan Brock said: “No new orders, premises shut down and furloughed staff unable to return to work were at the heart of the desolation as business struggled to continue with two hands tied behind their back.
“Even some heavy discounting by companies did little to offset their losses which are likely to be just the tip of the iceberg with businesses failing in increasing numbers.”