UK DATA: Flash PMI: Details point to high costs and low demand

Downside surprise of a point to flash manufacturing PMI (45.1 vs 45.4 prior, 46.1 exp) with the composite and services PMIs coming broadly in line with expectations. There was poor demand from the US for exports (in contrast to Germany) while private second new work fell the most for 2 and a half years. Costs saw sharp increases (albeit smaller than April). Overall, a rather stagflationary print.

• "Measured overall, new work across the private sector economy fell to the greatest extent for two-and-a-half years. This was often attributed to cutbacks to non-essential spending and delayed investment decisions among clients amid rising global economic uncertainty."
• "Subdued demand, higher payroll costs and a lack of pressure on business capacity all contributed to a further reduction in private sector employment. This was linked to a mixture of redundancies, restructuring, hiring freezes and the non-replacement of voluntary leavers. Manufacturers recorded a particularly steep decline in staffing numbers, with the pace of job shedding the fastest for five years."
• "UK private sector companies indicated a sharp increase in their average cost burdens during May, although the rate of inflation eased considerably from April's 26-month high. Similarly, output charge inflation eased to its lowest so far in 2025. Higher input prices were attributed to strong pay pressures, as well as rising utility bills."