Insights 
VT 
S&P Global Composite PMI for May recorded a figure of 49.4, surpassing the anticipated 49.3. This indicates that the UK’s economic activity, though just below the growth threshold, is showing signs of improvement compared to earlier months.
Despite facing continuous challenges, some sectors exhibit resilience. The focus is now on how these trends might influence upcoming monetary policy and economic conditions.
Economic Stabilisation Signs
The May reading of the S&P Global Composite PMI, sitting narrowly below the 50-point mark at 49.4, suggests that the country’s private sector continues to contract, albeit at a slower pace than previously measured. While not quite optimistic on its own, this slight upward revision from the forecasted 49.3 implies that certain pockets of the economy are beginning to stabilise after a period of sharper decline.
Manufacturing output, in particular, appears to have limited some of the overall downward drag, with services activity not deteriorating as rapidly as analysts had earlier assumed. It’s worth noting that the 50-level line on the PMI scale serves as a dividing point between expansion and contraction. So while the UK has not definitively turned a corner, the speed at which things are worsening seems to be delaying.
Given how monetary policymakers weigh in on forward-looking indicators, readings such as this one add more complexity to the near-term policy direction. Bailey and the Monetary Policy Committee will likely be cautious, particularly with wage pressures and inflation expectations still embedded. The proximity of this figure to the growth-no-growth line could well encourage them to hold rates steady a little longer than markets might prefer.
Market Positioning Strategy
We need to think about positioning with that in mind. Volatility across shorter tenor forwards, particularly rates-sensitive products, may persist. Traders should be prepared for the narrative to shift quickly, especially if upcoming data—like CPI figures or wage growth—provides a clearer signal on underlying demand. At the same time, any strengthening in services or business investment metrics might support a mild repricing in front-end rate expectations.
The near-term question, then, becomes less about recession and more about whether policy leans restrictive for too long. Threadneedle Street isn’t about to blink based on a single PMI report, but these figures will start to mean more if they form a string of readings showing deceleration slowing—or even halting altogether. That’s where we’re focusing.
From a positioning point of view, this creates room for cautious tactical plays—particularly in directional short-term contracts, where sensitivity to growth indicators remains elevated. Know that each data release now carries more weight. The probability distribution on rate moves is tightening, which typically leads to sharper market reactions, even to small surprises.
It’s not about looking for explosive pivots but calibrating to see whether a pause softens into a dovish lean. The data flow tells us that the slow climb away from contraction, if sustained, will act like a subtle upward pressure on market rate paths.
