UK Private Sector Activity Returns to Growth in July

The S&P Global UK Composite PMI rose to 52.2 in July 2026 from 49.3 in June, broadly matching the preliminary estimate of 52.1 and signaling the strongest expansion in private sector activity since April. The improvement was driven by renewed growth in services and the fastest increase in manufacturing output since September 2024. New business rose for the first time in three months, although employment continued to decline amid ongoing job losses in the services sector. Meanwhile, input cost inflation eased across both manufacturing and services, while output price inflation slowed to a five-month low.

The S&P Global UK Composite PMI rose to 52.1 in July of 2026 from 49.3 in the previous month, rebounding from two months of contraction and well ahead market expectations of a 49.7, according to a flash estimate. The improved activity levels were supported by both manufacturing (53.6 vs 52.6 in June) and services (51.8 vs 48.8), with the latter recovering from declines in the second quarter after the war in Iran triggered a surge in energy prices, lifting operation costs and squeezing demand from consumers. The services sector was also boosted by hospitality as good weather and FIFA world cup games drove households to increase consumption. New work received by firm inched higher on the aggregate, with factories having the largest improvement in four years. Still, companies continued to go through backlogs. Meanwhile, the start of the month saw a drop in input costs amid logistics improvements from the Middle East, although high labor costs remained a pressure on headcounts.

The S&P Global UK Composite PMI fell to 49.3 in June of 2026 from 49.7 in May, revised from the flash estimate of 49.4 for a second month of contraction following 11 months of expansion in the British private sector activity. It contrasted with the initial expectations of an expansion at 50.6. Activity gauges contracted for services (48.8 vs 49.3 in May), outweighing the expansion for that of manufacturing (52.5 vs 53.9). Total private sector sales fell the most since April 2025 as a decline in services offset growth in manufacturing, even though the latter slowed. Likewise, backlogs of work increased sharply. Still, input price inflation eased for a second month as a modest de-escalation in the Middle East eased the upward pressure on energy prices, although cost growth remained above average. Output charge inflation also softened. Employment continued to fall at a fast rate, with workers still citing higher National Insurance contributions. Looking ahead, confidence improved.