UK private-sector activity expanded at its fastest pace in four months during August, led by stronger services growth, although employment continued to fall and business costs increased more quickly.
The S&P Global flash UK composite purchasing managers’ index rose to 52.5 from 52.2 in July. Economists polled by Reuters had expected it to fall to 51.6.
A purchasing managers’ index, or PMI, is based on monthly company surveys. A reading above 50 signals an increase in activity, while a figure below 50 signals a decline. It is an early indication of business conditions rather than an official measure of gross domestic product.
Services offset slower manufacturing
The services business activity index increased to a six-month high of 52.8 from 52.1. The result was above the Reuters poll forecast of 51.8.
Manufacturing was less buoyant. Its headline PMI fell to a five-month low of 51.5 from 51.9, while factory production increased at its weakest pace in five months.
New work across the private sector rose at the fastest rate since February. S&P Global said stronger domestic business and consumer spending helped compensate for weaker export sales.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said “the expansion is being helped by sunny weather and tech investment”. He added that manufacturing growth had softened as precautionary stock-building slowed.
Services companies continued to reduce employment, but the decline was the smallest since October 2025. Business confidence in the sector nevertheless reached a seven-month high.
Business cost pressures increased again
Input costs rose sharply in August after increasing at their slowest pace in five months during July. Companies reported higher fuel, transport, wage and utility costs. The rate at which firms raised their own prices also accelerated.
The renewed pressure follows official figures showing that UK consumer inflation rose to 2.9% in July, largely because of higher household gas and electricity prices.
The two measures are different. The PMI records whether business costs and selling prices are rising or falling more quickly, while the Consumer Prices Index measures changes in prices paid by households. Together, however, they show that energy and transport costs remain a risk to the inflation outlook.
The survey also follows an Office for National Statistics estimate showing that the UK economy grew by 0.4% in the second quarter, when services output increased by 0.5%.
S&P Global said the August survey was consistent with economic growth of about 0.3% in the third quarter. That is an estimate based on the historical relationship between the PMI and GDP, not an official forecast or recorded growth rate.
The flash figures are based on 80% to 90% of the survey responses normally received. Final August manufacturing data are due on 1 September, followed by the services and composite readings on 3 September.
