The UK private sector expanded in May at the fastest pace since records began two decades ago, underpinned by easing of pandemic restrictions and high levels of pent up demand, flash survey results from IHS Markit showed on Friday.

The Chartered Institute of Procurement & Supply composite output index rose to 62.0 in May from 60.7 in April. The score matched economists’ expectations.

This was the highest reading since the index was first compiled in 1998. A reading above 50 indicates expansion in the sector.

Survey respondents widely commented on a post-lockdown bounce in business and consumer confidence, alongside higher output levels due to the phased reopening of customer-facing areas of the UK economy.

The performance of private sector business is hugely encouraging even with the obstacles of Brexit and Covid still in place, and becoming more resilient at a rate of knots, Duncan Brock, group director at CIPS, said.

“Had supply chains been less squeezed and the weather more seasonal for hospitality particularly, progress would have been off the scales,” Brock added.

The lofty levels of the composite PMI seen in recent months probably has a little further to run as the reopening of indoor hospitality for the full month means the services PMI has scope to rise further in June, Kieran Tompkins, an economist at Capital Economics, said.

The flash manufacturing Purchasing Managers’ Index rose to a record 66.1 in May from 60.9 in April. Economists had forecast the index to fall to 60.5.

At 61.8, the services PMI advanced to a 91-month high from 61.0 in April. The expected reading was 62.0.

Looser pandemic restrictions and high levels of pent up demand meant that a swift turnaround in labour market conditions continued in May. The private sector employment increased at the quickest pace since June 2014.

Cost pressures were the strongest for nearly thirteen years. Subsequent efforts to protect margins resulted in the sharpest increase in average prices charged by UK private sector firms since this index began in November 1999.

Further, business expectations for the next 12 months edged up to a new record high in May.

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