UK Business Activity Growth Picks Up to 8-Month High

The UK private sector continued to expand in October, with the flash Composite PMI Output Index rising to 53.1 from 52 in September, exceeding market expectations of 51.8 and reaching an eight-month high. Growth was supported by the sharpest increase in new business since September 2024. Both manufacturing and services recorded stronger output growth, while manufacturing activity posted its strongest increase in just over two years. Improving demand also helped employment return to growth for the first time since September 2024, ending a two-year period of job cuts, although the increase in staffing remained marginal. However, inflationary pressures intensified, with input costs rising sharply and the overall pace of cost inflation reaching its highest level since June. Business confidence regarding the year ahead edged higher in October, but optimism remained below the survey’s long-term average.

The S&P Global UK Composite PMI came at 52.0 in September 2026, revised slightly higher from the preliminary estimate of 51.7 but down from 52.5 in August, marking a three-month low. The slowdown reflected softer growth in both the services sector (52.1 vs 52.5 in August) and manufacturing (51.9 vs 51.7), although the latter continued to expand for an 11th consecutive month. New business growth also slowed to a marginal pace, while backlogs of work continued to decline, extending a trend seen since May 2023. On the price front, input costs for the private sector accelerated to their highest since June, largely due to higher energy, fuel and transport costs, pushing output price inflation higher. Employment fell marginally further despite positive projections for business activity. Looking ahead, business optimism eased from August but remained above its second-quarter average.

The S&P Global UK Composite PMI eased to 51.7 in September of 2026 from 52.5 in the previous month, slightly under market expectations of 52, according to a flash estimate. Still, the result marked a third month of expansion in British private sector activity after the surge in prices from the war in Iran triggered back-to-back contractions in May. Activity eased both for the services sector (51.7 vs 52.5 in August) and manufacturing (51.4 vs 52.1). Service providers noted that geopolitical uncertainty in the Middle East constrained orders, pressuring aggregate UK orders to ease, and contrasting with support from technology services. In turn, a group of manufacturers had sales supported by AI investment and defense spending. Meanwhile, employment fell for two straight years with firms still citing National Insurance costs. Also, input cost inflation hit a three-month high on widespread subsector increases, led by labor and fuel. Despite the headwinds, business optimism was unchanged.