A general view is seen over the London skyline from Canary Wharf in London, Britain October 19, 2016. REUTERS/Hannah McKay

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LONDON, June 7 (Reuters) – Britain’s business growth slowed sharply in May to its weakest level since the start of 2021 when the country was under lockdown from COVID-19, a survey showed, although the loss of dynamism was less severe than initially reported.

The S&P Global/CIPS Purchasing Managers composite index – covering services and manufacturing companies – fell to 53.1 from 58.2 in April, the lowest since February 2021, as the UK economy was hit by the… acceleration of inflation.

The final PMI reading represented an improvement over the initial “flash” reading of 51.8.

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The PMI for the mainstream services sector fell to 53.4 from 58.9 in April to show its biggest month-on-month decline since the survey began in 1996, although the final reading was up from the flash reading which also stood at 51.8.

Tim Moore, chief economics officer at S&P Global Market Intelligence, said the May figures painted a picture of slower growth and higher prices in the services sector, with input and output costs rising the most since the beginning of recordings in 1996.

“There were bright spots in customer-facing sectors of the economy in May, boosted by a rapid recovery in consumer spending on travel, leisure and entertainment,” Moore said.

“However, hospitality businesses have widely reported recovery constraints due to a lack of candidates to fill vacancies and difficulties in meeting demand due to continued global supply chain disruption.”

The Bank of England is concerned about increased pressure on labor market prices and recent COVID-19 shutdowns in China. With inflation at 9.0% in April, almost five times its target, the BoE has raised interest rates four times since December and said it would likely raise them again.

Moore said service providers fear consumers will be reluctant to pay higher prices, which will drive down spending later this year.

Separate data released earlier on Tuesday showed UK shoppers cut spending the most in May since the start of 2021. read more

Finance Minister Rishi Sunak last month gave in to calls for new support for households struggling to cope with soaring inflation, driven by soaring home energy tariffs.

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Written by William Schomberg; Editing by Toby Chopra

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