-Adds Detail To Version Transmitted At 0835 GMT
-UK May CIPS Services PMI 53.3; Unchanged Versus April – Markit/Reuters
-UK May CIPS All Sector PMI 52.3 in May; At Six-Month Low

LONDON (MNI) – The UK services sector posted firm growth in May,
fueling doubts that the Bank of England’s Monetary Policy Committee will
be pushed into providing further stimulus in its midday decision.

The headline May services PMI came in unchanged at 53.3, above
analysts’ median forecast for a 52.5 outturn and well above the 50
contraction/expansion level. The Bank of England was handed this data
last week, allowing the Monetary Policy Committee plenty of time to
discuss it ahead of Thursday’s 1100 GMT policy decision.

The all-sector PMI – which is a weighted average of the
output/activity balances from the May PMI trilogy of construction,
manufacturing and services – dropped to a six-month low of 52.3 in May,
but still clearly in expansionary mode.

The CIPS services data follow May’s manufacturing index which saw
the second steepest monthly fall in its history, which plunged deep into
contractionary territory at 45.9. That data was widely cited as raising
the chances of further easing from the MPC, with analysts stressing the
key was whether the dominant services sector followed manufacturing
down.

The details of the May services survey were encouraging.

Markit said incoming new business accelerated while service sector
employment rose at a solid rate, although business confidence fell to a
five-month low. Nevertheless, exactly half of survey respondents said
they had positive expectations for the year ahead.

There was evidence of easing inflation pressure. Average output
charges fell in May for the first time in three months while input cost
inflation hit its lowest level since October 2009.

“Reasonable growth of the UK service sector was registered in May
and there is some encouragement for near-term expansion given the
continuation of solid new business gains,” Paul Smith, Senior Economist
at Markit, said.

–London newsroom 0044 207 862 7491; email: drobinson@marketnews.com

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