UK private-sector activity hits one-year high as services offset manufacturing decline
S&P Global PMIs show composite index at 53 in August as firms report aggressive job cuts and rising input costs ahead of Chancellor Rachel Reeves' November Budget
Private-sector output in the UK was at its strongest in a year in August as an upturn in services activity offset an ongoing contraction in manufacturing, S&P Global survey data showed on Wednesday.
The S&P Global Composite Purchasing Managers' Index (PMI) rose to 53 in August from 51.5 in July, marking the fourth consecutive month the index has remained above the neutral 50 threshold that separates expansion from contraction. New business volumes expanded at the fastest pace since October 2024, driven largely by the services sector.
The UK Services PMI Business Activity Index jumped to 53.6 in August from 51.8 in July, while the Manufacturing PMI deteriorated further to 47.3 from 48, according to the S&P Global release. The divergence highlights the dominant role of services in the British economy and the continuing challenges facing factory output.
The stronger PMI readings offer a timely uplift for Chancellor Rachel Reeves, who this week set the date for the next Budget as 26 November and asserted that "Britain's economy isn't broken." In a statement she added: "If renewal is our mission and growth are our challenge, investment and reform are our tools."
Despite the headline expansion, the survey also signalled strains in the labour market and cost pressures. Respondents reported evidence of "aggressive" job cuts in some areas and an increase in input prices, developments that analysts warn could be passed through to consumer bills and squeeze household budgets.
Economists and market watchers typically use PMI data as a timely indicator of economic momentum ahead of official output figures. The August results suggest that, while demand for many services categories has picked up, weak manufacturing output remains a drag on overall growth and could temper the pace of recovery.
Policy makers face a balancing act ahead of the November Budget: the stronger services-led expansion may reduce immediate pressure for emergency measures, but persistent manufacturing weakness, reported job reductions and rising input costs create domestic risks that could influence fiscal planning.
The picture presented by the PMIs underscores an economy with uneven sectoral performance. A sustained improvement in private-sector activity will depend on whether services momentum can broaden to goods-producing industries and whether firms' hiring intentions stabilise. For now, August's survey indicates that growth is continuing but accompanied by cost and employment pressures that Treasury officials and business leaders will be monitoring ahead of the autumn fiscal statement.