UK Services Sector Growth Slows Less than Initially Thought

The S&P Global UK Services PMI fell to 51.7 in September 2026 from 52.5 in August, below market forecasts of 52, flash estimates showed. The latest reading pointed to a slower expansion of overall service sector output, with growth hitting a three-month low. Service providers cited weak domestic conditions and geopolitical uncertainty as constraints on activity growth, although demand for technology services provided some support. New business volumes posted a renewed decline amid budget constraints, while export sales fell further. Employment numbers also continued to decrease in September, amid higher operating costs, efficiency gains, and a lack of pressure on business capacity. On the price front, input cost pressures strengthened, mainly on account of fuel prices. Business confidence among service providers eased slightly in September amid rising geopolitical uncertainty, although some firms remained optimistic about the longer-term outlook and a rebound in sales.

The S&P Global UK Services PMI was revised slightly down to 52.5 in August 2026 from a flash estimate of 52.8, marking a modest improvement from July's 52.1. The latest reading signalled a moderate expansion of overall service sector output, the strongest in four months. New orders expanded marginally in August, signalling a modest improvement in demand as business and consumer spending recovered. Export sales remained under pressure, declining for a sixth consecutive month amid subdued European demand and geopolitical uncertainty. Meanwhile, employment fell at the slowest pace since October 2025. Input cost inflation picked up from July’s five-month low amid higher fuel, transport, wage, food and technology costs. Output prices rose sharply and at a faster pace. Business optimism strengthened for the third month running to its highest since February, shrugging off elevated inflation and ongoing uncertainty linked to the Middle East conflict.

The S&P Global UK Services PMI rose to 52.8 in August 2026 from 52.1 in July, contrasting with market forecasts of 51.8, flash estimates showed. The data showed the services sector expanded for a second successive month, with the pace of growth accelerating to its steepest since February, amid an improvement in demand conditions. Sunny weather and technology investment reportedly supported business activity, despite lingering concerns over Middle East tensions and domestic government policy. Employment continued to decline, but the rate of job losses was only marginal and the least marked since October 2025. On the price front, service providers faced stronger input cost pressures, driven mainly by higher fuel and transportation costs, alongside rising wages and utility bills. Lastly, business confidence improved further, bolstered by stronger order books and hopes for a sustained recovery in economic conditions at home and abroad.