The UK private sector expanded at a faster pace in August, driven by a rebound in services activity, according to preliminary data from S&P Global. The S&P Global Flash UK Composite Output Index climbed to 52.5 from 52.2 in July, remaining above the 50.0 threshold that separates growth from contraction for a second consecutive month.
Services sector activity accelerated to its strongest pace since February, supported by improving domestic demand and client confidence. However, private sector employment continued to decline, with job losses easing to the slowest rate since October 2025. The services sector has now recorded 23 straight months of job cuts, the longest streak since the survey began in 1996.
Manufacturing output grew only marginally in August, marking the weakest expansion in five months. Geopolitical uncertainty and elevated cost pressures weighed on production, while total new business volumes rose at the fastest pace since February. Domestic demand offset softer export activity, though tight budgets and elevated risk aversion continued to constrain order books.
Input cost inflation for private sector firms accelerated for the first time in four months, driven by higher fuel, transport, raw material, and food prices. Selling price inflation also increased in August after easing to a five-month low in July. Business optimism improved for a third straight month, reaching its highest level since February, as firms anticipate firmer domestic and international economic conditions despite lingering concerns over competition, input costs, and political uncertainty.
S&P Global Chief Business Economist Chris Williamson noted that the UK economy gained momentum in August, reinforcing expectations for solid third-quarter growth of around 0.3%.
The data suggests a mixed recovery, with services leading the rebound while manufacturing remains constrained by external pressures.
