Britain’s private-sector economy gathered a little more momentum in August, with stronger services activity offsetting a cooler manufacturing performance and offering fresh evidence that growth has remained resilient through the summer.
The S&P Global flash UK Composite PMI Output Index rose to 52.5 in August from 52.2 in July, its highest reading since April. Any figure above 50 indicates expansion. The improvement was led by services, where the business activity index climbed to 52.8 from 52.1, reaching a six-month high.
Services provide the main lift
S&P Global said service-sector activity expanded at its fastest pace since February. New business also strengthened, helped by improved domestic demand, consumer-facing activity and travel and transport. Technology investment was another contributor, while favourable summer weather supported parts of the leisure economy.
Manufacturing remained in expansion territory, but momentum softened. The manufacturing PMI eased to 51.5, while manufacturing output rose at its weakest pace in five months as earlier precautionary stock-building faded.
The contrast matters because services account for the majority of UK economic activity. The flash survey therefore points to an economy that is still expanding even as the composition of that growth shifts away from the factory-led gains seen earlier in the year.
Confidence improves, but hiring remains cautious
Business sentiment strengthened in August, with S&P Global reporting the most upbeat expectations since the latest Middle East conflict began. Companies cited firmer domestic conditions and stronger order books as reasons for greater confidence about the year ahead.
The labour picture was less positive. Employment continued to fall across the private sector, although the pace of job losses moderated and was the weakest since October 2025. That fits with a wider pattern of employers remaining cautious even as activity improves.
British Business Review has previously reported on the economy’s 0.4% expansion in the second quarter. The latest PMI data do not replace official GDP figures, but they offer a more timely indication of business conditions and suggest that the third quarter began on firmer footing.
Cost pressures remain a constraint
The stronger activity figures came with a warning on inflation. Average input costs rose sharply in August, with businesses pointing to higher fuel prices, transport costs, wages and utilities. S&P Global said selling-price pressures also increased.
That combination of firmer growth and persistent cost pressure is likely to reinforce a cautious approach at the Bank of England. Reuters reported that the survey added to expectations that policymakers will want clearer evidence on the path of both growth and inflation before changing interest rates.
S&P Global’s chief business economist Chris Williamson said the survey was broadly consistent with quarterly GDP growth of around 0.3% in the third quarter. That would represent a slower pace than some earlier periods, but still indicate continued expansion rather than stagnation.
What the figures mean for UK businesses
For companies, the August data present a mixed but generally more constructive picture. Demand conditions have improved, confidence is recovering and the services economy is expanding at a healthier pace. At the same time, hiring remains restrained and cost pressures have not disappeared.
The historical pattern is also worth noting. UK business activity has been volatile through 2026, with stronger growth early in the year followed by a setback in May and June before activity recovered in July and August. The latest figures therefore look more like a continuation of that uneven recovery than the start of a new boom.
Sources: S&P Global, 21 August 2026; Reuters, 21 August 2026.
