UK business activity contracts in May as services slump

Business activity across the United Kingdom contracted in May for the first time in over a year, according to a key economic survey released Thursday. The downturn was attributed to a combination of geopolitical conflict and domestic political uncertainty.

The preliminary UK Composite Purchasing Managers Index (PMI), compiled by S&P Global, fell to 48.5 in May from 52.6 in April. This marks the first reading below the 50.0 growth threshold since April 2025 and was significantly below economists' forecasts. The decline represents the most widespread drop in private sector activity in more than a year.

The contraction was driven primarily by a sharp downturn in the services sector, where activity plunged to its lowest level since January 2021. Surveyed firms reported that hesitant consumer spending, weaker investment sentiment, and delayed spending decisions, particularly for international travel, were linked to the ongoing conflict in the Middle East. A number of firms also cited concerns over domestic political uncertainty impacting confidence.

In contrast, manufacturing firms reported a rush of orders. However, analysts noted this increase was largely due to clients attempting...