A carefully-watched survey indicates a intense slowing in the price of economic growth in May, with indicators that worse is yet to come back.
The closely-watched S&P Global / CIPS Flash UK Purchasing Managers Index (PMI) hit fifty one.8 in May – a fifteen-month low and down from 58.2 in April.
Anything above 50 is considered growth.
Chris Williamson, chief commercial enterprise economist at S&P Global Market Intelligence, said: “The UK PMI survey information signal a excessive slowing in the price of economic growth in May, with forward-searching indicators hinting that worse is to come back.
“Meanwhile, the inflation photograph has worsened as the rate of increase of companies’ charges hit yet any other all-time excessive.
“The survey facts consequently point to the financial system almost grinding to a halt as inflationary stress rises to unheard of degrees.
“The tailwind from the reopening of the economic system has dwindled, having been conquer by means of headwinds of hovering prices, deliver delays, labour shortages and more and more gloomy potentialities.
“Companies cite more and more cautious moods among families and enterprise customers, linked to the cost-of-residing disaster, Brexit, rising interest rates, China’s lockdowns and the battle in Ukraine.”
Speaking afterward Sky’s Ian King Live programme, Mr Williamson stated there was evidence some clients have been pushing back towards rate will increase, caution that this will have accidental effects.
He said: “It’s manifestly a concern for organisation growth and earnings, it’s perhaps a positive signal that common inflation may start to come down, but there’s this real resistance now building amongst clients who are simply being squeezed so much by way of the electricity fee hikes.
“You’ve were given borrowing charges that are going to begin increasing as the Bank of England takes extra aggressive motion to convey down inflation.
“One of the demanding signs and symptoms we’ve were given on this survey is that groups’ prices – which is a leading indicator of excessive street inflation – they’re persevering with to boost up, so the fee burden is getting worse and worse for the ones corporations.
“They’re going to need to skip that on or take that cut to income – so both way you look at it, there may be an inflationary scenario or a situation of weakening income growth.
“Many humans may say it’s approximately time organizations have been incomes less income, but the key component there is that if organizations start to re-trench, then they may start cutting employment, they may prevent investing a lot, so it has a greater longer-term effect on the economy – the ones profits power destiny increase.”
