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Activity growth in the UK was better than expected in August but an ongoing fall in employment continued to be a weak spot, preliminary data published by S&P Global showed Thursday. The S&P Global flash UK purchasing managers’ composite output index rose to 53.0 points in August, a 12-month high, from 51.5 in July, easily beating the FXStreet-cited consensus of 51.6 in August. Climbing further above the neutral 50-point mark separating growth from contraction, it indicates the pace of growth sped up in August. S&P Global noted that while new business volumes grew at the strongest pace since October 2024, employment was again a weak spot with total workforce numbers falling for the eleventh consecutive month at a ‘marked’ pace. Chris Williamson, chief business economist at S&P Global Market Intelligence said: ‘The flash UK PMI survey for August indicated that the pace of economic growth has continued to accelerate over the summer after a sluggish spring, the rate of expansion now at a one-year high. The services sector has led the expansion, but manufacturing also showed further signs of stabilising.’ Williamson, however, cautioned: ‘Companies report concerns over the impact of recent government policy changes, as well as unease emanating from broader geopolitical uncertainty. Goods exports are still falling especially sharply. Payroll numbers also continue to be cut at an aggressive rate by historical standards as firms cite weak order books and concerns over rising staff costs due to the policies announced in the autumn Budget, which also contributed to persistent inflation pressures.’ Citing UK inflation numbers for July, which came in higher than anticipated on Wednesday, Williamson added: ‘Among a divided Bank of England rate setting committee, the perceived need for any future rate cuts will be very much data dependent.’ UK consumer price and retail price inflation were both higher than anticipated on an annual basis, the Office for National Statistics had reported on Wednesday. The consumer price index for July rose 3.8% on-year, from a 3.6% rise in June. It exceeded FXStreet-cited consensus expectations of a 3.7% increase. On a monthly basis, CPI rose 0.1%, defying the consensus forecast of a 0.1% decrease but slowing from a 0.3% rise in June. Meanwhile, the flash UK manufacturing index fell to 47.3 in August from 48.0 in July, meaning the activity fall in UK manufacturing worsened, and was below the consensus of an uptick to 48.3 in August. The flash UK manufacturing output index was unchanged at 49.5 in August. Goods producers linked lower output to a lack of new work and intense competitive pressures, S&P Global said. The flash UK services PMI meanwhile rose comfortably to 53.6 in August, a 12-month high amid improved demand conditions, from 51.8 in July, beating the consensus of an unchanged figure of 51.8 in August. Business activity expectations for the year ahead rose to the highest since October 2024, S&P Global said, amid rising optimism in the manufacturing and service sectors in August. ‘Service providers linked growth expectations to forthcoming business investment and product diversification plans, alongside an anticipated revival in domestic consumer spending. Meanwhile, manufacturers again noted caution about the outlook for global trade due to US tariff uncertainty, but many commented on hopes of a rebound in customer demand and expected a tentative uplift in general market conditions over the next 12 months,’ S&P Global said. The flash PMI features a panel of 1,300 companies based in the UK manufacturing and services sectors, with responses collected between August 12 and 19. Final August data for manufacturing will be out on September 1, with services and composite indicators to be published on September 3. Copyright 2025 Alliance News Ltd. All Rights Reserved.
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