The UK private sector expanded at a faster pace in August, driven by a rebound in services activity, according to preliminary S&P Global PMI data. The composite output index rose to 52.5 from 52.2 in July, marking the second consecutive month above the 50.0 threshold that separates growth from contraction.
Services sector activity accelerated to its strongest pace since February, supported by improving domestic demand and steady client confidence. Employment in the sector continued to decline, extending a 23-month streak of job cuts—the longest since the survey began in 1996—amid cost pressures and reluctance to replace voluntary leavers. Manufacturing output grew only marginally, the weakest pace in five months, constrained by geopolitical uncertainty and elevated production costs.
Total new business rose at the fastest rate since February, with domestic spending offsetting weaker export demand. Input costs increased for the first time in four months, driven by higher fuel, transportation, and raw material expenses, while output price inflation ticked up after a five-month low in July. Business optimism improved for a third straight month, reaching its highest level since February, though concerns over competition, input prices, and domestic political uncertainty tempered the outlook.
Private sector employment continued to decline in August, though the rate of job losses was the slowest since October 2025. S&P Global’s Chris Williamson projected solid economic growth of around 0.3% in the third quarter, citing the latest PMI data as a key indicator.
The survey underscores a mixed recovery, with services leading the expansion while manufacturing remains subdued under cost pressures and external headwinds.
