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UK service sector activity expansion beats estimates in May

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UK service sector activity expansion beats estimates in May

The U.K. services sector expanded more than expected in May, supported by a rebound in new business and staffing, survey data from IHS Markit and the Chartered Institute of Procurement & Supply showed.

The seasonally adjusted services purchasing managers' index reached 51.0 in May, up from 50.4 in April and above the Econoday consensus estimate of 50.6. The reading represented the strongest expansion in the British services sector since February, according to the survey.

New work rose for the first time in five months but only at a marginal rate as Brexit uncertainty continued to weigh on business and consumer spending. Staffing levels also rebounded in May, while work backlogs continued to decline.

Business sentiment also improved in May, while service providers' growth expectations rose to the strongest since September 2018.

"Although service sector business activity gained a little momentum in May, with growth reaching a three-month high, the pace of expansion remained disappointingly muted and failed to offset a marked deterioration in manufacturing performance and a fall in output of the construction industry during the month," said Chris Williamson, chief business economist at IHS Markit.

The all sector output index that covers manufacturing, services and construction activities came in at 50.7 in May, down from 50.9 in April.