The UK economy expanded at its fastest pace in five months in August, with services activity accelerating despite mounting cost pressures, according to final PMI data released Thursday.
S&P Global’s UK Services PMI rose to 52.5 in August from 52.1 in July, marking the second consecutive month of growth and exceeding the provisional reading of 52.8. The broader Composite PMI, which includes manufacturing, increased to 52.5 from 52.2, reaching its highest level since April. The New Work Index edged down to 50.7 from 50.8, indicating marginal growth in new orders.
Cost pressures intensified as more firms reported raising output prices, following a temporary slowdown in July. Input costs also climbed, with businesses citing higher energy and wage expenses. The Bank of England is monitoring the pass-through of surging energy prices, driven by the U.S.-Iran conflict in the Middle East, as a potential inflationary risk.
Business optimism among services firms climbed to its highest level since February, despite lingering concerns over geopolitical tensions and inflation. Employment declined at the slowest pace since October 2025, supported by improved sales pipelines and stabilizing market conditions.
Tim Moore, economics director at S&P Global Market Intelligence, said August data reflected "improving operating conditions across the UK service economy." He noted that business and consumer spending had rebounded after declining in the second quarter of 2026, signaling tentative economic stabilization.
