UK Service Sector Growth Overstates Economic Strength, ITEM Club Analyst Says

On May 6, Jin10 reported that Matt Swannell from ITEM Club stated in a report that the rise in the UK service sector's activity has exaggerated the actual strength of the UK economy. The UK's service sector PMI increased to 52.7 in April, up from 50.5 the previous month. However, Swannell noted that amid the energy crisis, weak consumer demand, rising inflation, and low business investment are expected to start hindering economic growth from mid-2026. He pointed out that although economic activity has picked up, new orders have largely stagnated, and cost pressures continue to intensify. "We believe the Bank of England will weigh the accumulating price pressures against the increasingly fragile job market, thus maintaining a wait-and-see approach," Swannell said. Due to persistently high labor costs, market risks are leaning towards the Bank of England raising interest rates this summer.