UK services activity falls as Iran war costs weigh
The S&P Global UK Services PMI dropped to 49.3 in May, signaling the first contraction in output in over a year. Rising energy and transport costs linked to the Iran conflict have pressured business sentiment, though markets expect the Bank of England to hold interest rates steady at 3.75 percent.
The United Kingdom services sector contracted in May as the conflict in Iran drove up operating costs and dampened business optimism. The S&P GLOBAL INC Services PMI fell to 49.3 from 52.7 in April, marking the first output decline since April 2025. While the figure indicates contraction, the reading was stronger than the original flash estimate of 47.9.
Input cost inflation cooled slightly from April but remained at the second-highest level since December 2022. Firms cited rising energy, fuel, and transport costs alongside higher wage demands as primary drivers of the surge. Over 50% of surveyed businesses reported an increase in their average cost burdens during the month.
