Market News

Business activity continues to rise, but growth eases to
four-month low

Key findings

• Weaker increases in output and new orders
• Inflationary pressures remain elevated
• Employment falls for first time in six months

The headline figure derived from the survey is the Purchasing
Managers’ Index™ (PMI®). Readings above 50.0 signal an
improvement in business conditions on the previous month,
while readings below 50.0 show a deterioration.

The headline PMI registered 52.7 in May, remaining above
the 50.0 no-change mark for the sixth successive month and
signalling a solid strengthening of business conditions over
the month. That said, the latest reading was down from 54.2
in April and pointed to the least marked improvement in the
health of the private sector since January.

The slowdown in overall growth was seen across both output
and new orders, which each increased at the slowest rates
in four months. Where expansions were recorded, panellists
linked this to customer demand improvements, higher client
numbers and new product launches.

Output increased across all four broad sectors covered by
the report, with growth sharpest in wholesale & retail and
manufacturing.

Inflationary pressures remained elevated in May, despite
easing slightly from April. Purchase costs rose rapidly
amid higher raw material prices, currency weakness and
increased transportation costs.

Staff costs were also up, but at the slowest pace since March
2023 as a reduction in employment acted to limit the rise in
wage bills. Workforce numbers decreased for the first time
in six months as some firms reported that difficulties paying
staff had led to resignations.

Shortages of staff contributed to a second successive rise
in backlogs of work, but respondents indicated that the main
factor holding up the completion of projects was delays in payments from customers. 

The latest rise in outstanding business was the sharpest since February 2023.

While employment decreased, companies continued to
expand their purchasing activity at a rapid pace. Respondents
mentioned the need to satisfy both current and future client
requirements. In turn, stocks of purchases also rose, and at
the fastest pace in three months.
Competition among suppliers and prompt payments resulted
in a further shortening of suppliers' delivery times, albeit one
that was the least marked in 2025 so far.
Business confidence waned for the fourth consecutive month
and was among the lowest on record. That said, companies
remained optimistic that output will expand over the coming
year, with positive sentiment linked to business expansion
plans, marketing and restocking.