The UK’s service sector strengthened in August, with the S&P Global flash Purchasing Managers’ Index rising to 52.8 from 52.1 in July, marking the highest reading since February. The increase exceeded all forecasts in a Reuters poll that had anticipated a decline to 51.8. The manufacturing PMI, meanwhile, cooled to 51.5 from 51.9, the lowest since March, aligning with expectations.
The composite PMI, which combines services and manufacturing activity, climbed to 52.5 from 52.2, beating forecasts for a drop to 51.6. The data suggest economic growth of around 0.3% in the third quarter, consistent with the 0.3% expansion recorded in the second quarter. Consumer confidence also improved, reaching its highest level since August 2024, shortly after the Labour government took office.
Employment in the services sector continued to decline, though at the slowest pace since October 2025. Business optimism among service providers rose to a seven-month high, supported by domestic demand, favorable weather, and increased technology investment, including gains from the AI sector.
Input and output price pressures partially rebounded after easing in July, reflecting a recent rise in global energy costs amid ongoing geopolitical tensions involving Iran. Manufacturing growth softened as precautionary stockpiling waned, according to S&P Global’s chief business economist, Chris Williamson.
The data indicate that while the UK economy shows signs of resilience, the Bank of England is likely to maintain a cautious stance, with no imminent rate hikes expected until growth and inflation trends become clearer.
