UK service sector sees 24-year high growth

The UK Purchasing Managers Index at service firms reported the fastest increase in business activity for over two decades in May. The easing of restrictions earlier this month has fuelled resurgent consumer and business spending, which has pushed new orders to levels not seen since October 2013 as well as a piling up of work backlogs. The realisation of months of pent-up consumer demand is having two notable effects on the UK economy: Firstly, this increased business confidence and staff shortages has pulled employment growth to its strongest rate in six years as the rate of job creation continues to accelerate. Secondly, the increased activity has led UK businesses to raise prices at the fastest rate since survey records began in 1996, pouring more fuel on the growing inflation narrative. The UK’s FTSE 100 seemed unperturbed by the data in early trading, continuing a small pullback after a three-day positive streak.