UK Services Activity Surprises on the Upside

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.

The S&P Global UK Services PMI increased to 52.1 in July 2026, revised up from the preliminary 51.8 and recovering from June's 48.8, confirming a return to modest expansion following two months of contraction. New work increased for the first time since February, on stronger consumer spending and solid demand for technology services, while overseas new business declined for a fifth straight month, though at the slowest pace in the sequence. Geopolitical uncertainty surrounding the Middle East conflict remained a key growth headwind. Employment fell for a 22nd consecutive month, albeit at the slowest pace since October 2025. Meanwhile, input price inflation eased for a third straight month to its lowest level since February, aided by lower fuel and gas costs, while output price inflation slowed to a five-month low. Business confidence climbed to its highest level in five months on hopes of greater global economic stability, stronger sales pipelines, and increased business investment.

The S&P Global UK Services PMI rose to 51.8 in July 2026 from 48.8 in June, reaching a three-month high and signaling a return to expansion in the services sector, beating market expectations of 49.4, flash data showed. Business activity increased for the first time since April, with firms reporting stronger demand for consumer services, particularly in parts of the hospitality industry, supported by the FIFA World Cup. However, many companies continued to highlight elevated client uncertainty linked to the conflict in the Middle East, while some also said unusually hot weather weighed on activity. Outstanding business declined further, reflecting another marked reduction in backlogs of work, and service providers continued to trim staffing levels. On the inflation front, input cost pressures moderated, with service firms reporting softer increases in operating expenses. Business confidence also improved, as companies became more optimistic about activity over the coming year.