UK Services Growth at Eight-Month High

The S&P Global UK Services PMI rose to 52.8 in October 2026, up from 52.1 in September, although below the preliminary estimate of 53.1. Nevertheless, the latest reading signaled the fastest expansion in services activity since February, supported by improving customer demand and stronger order books. Some firms reported increased sales linked to AI investment spending, receding client risk aversion and more supportive economic conditions, although squeezed household budgets and geopolitical uncertainty continued to weigh on demand. Total new business increased at the fastest pace since January, and employment returned to growth for the first time in two years. Meanwhile, backlogs of work continued to decline. On the price front, input costs rose at their fastest pace in five months, while output price inflation eased slightly as intense competition continued to limit firms' pricing power. Business confidence also improved, reaching its highest level since February.

The S&P Global UK Services PMI rose to 53.1 in October 2026 from 52.1 in September, above market forecasts of 51.8, flash estimates showed. The latest data showed that growth in overall service sector accelerated to its highest level in eight months, led by a marked improvement in new orders. A number of firms cited a boost to sales from AI investment spending and rising demand for technology services. Employment growth resumed in October, supported by an influx of new projects and a focus on long-term business expansion, although many firms continued to adopt cautious hiring strategies. Meanwhile, price pressures remained elevated. Lastly, business sentiment improved, with service providers highlighting planned investment in new products and marketing initiatives, alongside a gradual recovery in expectations for broader market conditions.

The S&P Global UK Services PMI was revised slightly higher to 52.1 in September 2026 from a flash estimate of 51.7, slightly below August's 52.5. The reading signalled moderate growth in the services sector, with new orders rising only slightly and posting their slowest growth in three months. Geopolitical tensions, tighter consumer budgets and higher borrowing costs weighed on demand, although resilient technology services demand remained a bright spot and client risk aversion eased. Employment continued to fall, marking two years of job cuts, although the decline eased to its slowest pace since October 2025. Meanwhile, input-cost inflation accelerated to its fastest pace since June, reflecting higher fuel prices and payroll costs. This led to the sharpest increase in prices charged since May. Looking ahead, firms remained optimistic, but confidence eased from August’s six-month high amid economic uncertainty, Middle East worries and weak real estate and construction demand.