By Kristy Dorsey

The speed of the plunge in activity across the UK’s private sector slowed this month from April’s dizzying declines, according to a key survey, but the contraction in the manufacturing and services sectors remained sharp as lockdown restrictions continued.

The composite UK manufacturing and services output index, produced by the Chartered Institute of Procurement and Supply (CIPS) and IHS Markit, registered 28.9 in May. That was an improvement on the previous month’s reading of 12.9, but remains well below the 50.0 threshold that separates expansion from contraction.

The latest reading was based on responses collected between May 12 and 19. Apart from April’s dismal reading, it was by far the fastest decline recorded since comparable data was first compiled in January 1998.

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“The minor easing in the downturn compared to last month’s figures only serves to highlight the depth of the fall in April’s output, and does not signal that the pathway is clear for an improvement in the manufacturing and services sectors,” CIPS group director Duncan Brock said.

“This month saw another steep fall in overall business activity, surpassing for the third time the rates of decline seen during the global financial crisis in 2009. No new orders, premises shut down and furloughed staff unable to return to work were at the heart of the desolation as businesses struggled to continue with two hands tied behind their back.”

Approximately 55% of service providers reported a drop in business activity in May, while only 12% saw an increase since April. There was greater demand for some technology services, but many travel, tourism and leisure firms continued to report that activity remained at zero.

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On the manufacturing front, 54% of firms reported a fall in output during May, while 24% saw an expansion on the previous month. Most of the growth reported was linked to healthcare-related products.

There were some reports that activity was helped in May by some re-opening of businesses amid the modest easing of lockdown restrictions in England.

However, the fall in private sector employment increased and was the second sharpest ever after April’s record decline. New business also fell at the second-fastest rate since April.