UK firms report slide in activity due to Iran war and political turmoil
May composite PMI data published by S&P Global show that the UK private sector posted its weakest reading in six months. Survey respondents pointed to the Iran war's energy impact and political uncertainty inside the government as the main drivers of the slowdown.
The UK composite PMI reading for May published by S&P Global slipped to 47.6, the weakest figure in six months. Both the services and manufacturing components remained in contraction territory. Companies responding to the survey said rising diesel and natural-gas prices were postponing customer orders.
A separate finding showed that around 38% of executive respondents had pushed back capital-spending decisions because of uncertainty around the current government's fiscal policy. The new prime-ministership scheduled for September and active intra-party competition reinforced the sense of indecision.
Ahead of the Bank of England's June meeting, markets brought a potential rate cut forward into the year. Sterling closed about 0.4% lower against the dollar after the survey, while two-year gilt yields fell roughly six basis points.
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