UK Preliminary Services PMI plunges to 51.8 in May vs. 57.3 expected

• UK Manufacturing PMI drops to 54.6 in May, misses estimates.
• Services PMI in the UK comes in at 51.8 in May, a big miss.
• GBP/USD drops sharply to 1.2515 on awful UK Preliminary PMIs.

The seasonally adjusted S&P Global/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) drops sharply to 54.6 in May versus 55.1 expected and 55.8 – April’s final reading.

Meanwhile, the Preliminary UK Services Business Activity Index for May slumped to 15-month lows, arriving at 51.8 versus April’s final readout of 58.9 and 57.3 expected.

Chris Williamson, Chief Business Economist at S&P Global, commented on the survey

“The UK PMI survey data signal a severe slowing in the rate of economic growth in May, with forward-looking indicators hinting that worse is to come. Meanwhile, the inflation picture has worsened as the rate of increase of companies' costs hit yet another all-time high.“

“The survey data therefore point to the economy almost grinding to a halt as inflationary pressure rises to unprecedented levels.”

FX implications

Poor UK Preliminary Manufacturing and Services PMIs took the steam out of the GBP/USD rally, as the pair changed course in a knee-jerk reaction.

The spot is trading at 1.2514, down 0.57% at the time of writing. Before the UK PMIs release, cable was trading firmer around 1.2590.