The S&P Global UK flash PMI survey for August shows that d that private sector output growth accelerated to its fastest for 12 months in August, led by a solid upturn in the service economy. Moreover, new business volumes expanded at the strongest pace since October 2024.
However, employment was again a weak spot as total workforce numbers decreased for the eleventh month running and at a marked pace.
The headline seasonally adjusted S&P Global Flash UK PMI Composite Output Index posted 53.0 in August, up from 51.5 in July and above the neutral 50.0 threshold for the fourth successive month. Output growth was the strongest since August 2024, with a faster rise in service sector activity more than offsetting another marginal decline in manufacturing production.
Service providers typically cited improved demand conditions, while goods producers linked lower output to a lack of new work and intense competitive pressures.
Employment decreased at a solid pace in August, with cutbacks to payroll numbers seen in both the manufacturing and service sectors. Survey respondents widely commented on cautious hiring strategies and restructuring of workforces in response to elevated cost pressures.
Despite a sustained downturn in staffing levels and a renewed improvement in new order books, the latest survey data highlighted the fastest decline in backlogs of work for three months.
“The flash UK PMI survey for August indicated that the pace of economic growth has continued to accelerate over the summer after a sluggish spring, the rate of expansion now at a one-year high. The services sector has led the expansion, but manufacturing also showed further signs of stabilising,” said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.
“It’s evident from survey measures of order books, however, that the demand environment remains both uneven and fragile. Companies report concerns over the impact of recent government policy changes, as well as unease emanating from broader geopolitical uncertainty. Goods exports are still falling especially sharply.”
Williamson noted that payroll numbers also continue to be cut at an aggressive rate by historical standards as firms cite weak order books and concerns over rising staff costs due to the policies announced in the autumn Budget, which also contributed to persistent inflation pressures
“While the rise in business activity signalled by the PMI alongside the uplift in inflation to 3.8% in July lowers the chances of further rate cuts this year, more data is required to assess both the sustainability of robust economic growth as well as the stickiness of the upturn in price pressures.
“Among a divided Bank of England rate-setting committee, the perceived need for any future rate cuts will be very much data-dependent,” he said.
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