The UK private sector expanded at a faster pace in August, with the S&P Global Flash UK Composite Output Index climbing to 52.5 from 51.2 in July, marking the second consecutive month above the 50.0 threshold that separates growth from contraction.
The acceleration was led by the services sector, where business activity rose to its strongest pace since February. Firms cited steady improvements in client confidence and domestic economic conditions as key drivers. However, the services sector continued to shed jobs for the 23rd straight month—the longest stretch since the survey began in 1996—as cost pressures deterred replacements for voluntary leavers.
Manufacturing output grew only marginally, recording its weakest expansion in five months. Geopolitical uncertainty and elevated cost pressures weighed on production, offsetting modest gains in domestic demand.
Total new business rose at the fastest pace since February, supported by stronger domestic spending. Export sales remained subdued, constrained by tight budgets and heightened risk aversion among overseas clients. Input costs accelerated for the first time in four months, driven by higher fuel surcharges, transportation expenses, raw material prices, and food costs. Output price inflation ticked up after reaching a five-month low in July.
Private sector employment continued to decline in August, though the pace of job losses eased to the slowest since October 2025. Business optimism improved for a third consecutive month, reaching its highest level since February, as firms anticipated firmer order books and gradual economic stabilization. However, growth outlooks remained tempered by competitive pressures, rising input costs, and domestic political uncertainty.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said the August data suggested solid economic growth of around 0.3% in the third quarter.
