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The UK service sector grew at the fastest rate since April 2024 in August, as output and new work climbed, survey results from S&P Global showed on Wednesday. The S&P Global UK services purchasing managers’ business activity index rose to 54.2 points in August from 51.8 in July, topping the flash reading of 53.6 released late last month. The reading moved further above the neutral 50-point mark separating growth from contraction to the highest reading for 16 months. This indicates a ‘solid rate’ of output growth at UK service sector firms, compared to the ‘relatively subdued’ expansion in the second quarter. S&P Global said UK service providers commented on a general improvement in trading conditions, the release of pent-up demand, and support from lower borrowing costs. New orders returned to expansion, after a moderate decline in July. The increase in total new work received by service sector firms in the UK was the strongest since September 2024. Data in August also indicated a rise in new export orders for the first time since March. Despite the increase in workloads, S&P Global said the survey showed service providers retained capacity to complete both new and existing orders. As a result, backlogs of work fell for the twenty-seventh month running. Staffing numbers in the UK service economy fell again amid spare capacity and margin pressure linked to rising payroll costs. S&P Global noted that the current 11-month period of falling employment is the longest seen since the period between 2008 and 2010. Overall input costs increased sharply in August at the fastest pace for three months, after input price inflation eased to a seven-month low in July. Looking ahead, nearly half of the survey panel said they expect a rise in business activity during the year ahead, up to 49% from 44% in July, while 14% predict a decline. This was the strongest degree of business optimism since October 2024. The UK composite PMI also increased to 53.5 points in August from 51.5 in July. The index was above the neutral threshold for the fourth consecutive month, and beat a flash reading of 53.0 from last month. On Monday, S&P Global reported that the PMI for manufacturing fell to 47.0 points in August from 48.0 in July, remaining below the 50-point neutral mark. It also slightly underperformed the flash reading of 47.3 points. ‘August data highlights a welcome acceleration of output growth and a swift rebound in order books after July’s dip, leaving the UK service economy on a much stronger footing as the end of summer comes into view,’ said Tim Moore, economics director at S&P Global Market Intelligence. ‘The seasonally adjusted new orders index rose by over six points in August, which was the largest one-month gain since March 2021 and indicative of a decisive improvement in customer demand. This was helped by greater domestic business and consumer spending, alongside the first increase in export sales since March.’ Moore added: ‘Improved sales pipelines, lower borrowing costs and receding fears about US tariffs all helped to boost business optimism. However, many service providers still commented on elevated government policy uncertainty and worries about forthcoming tax-raising measures expected in the autumn budget.’ The services PMI is compiled by S&P Global from responses to a questionnaire from a panel of around 650 service sector companies in the UK. The responses were collected between August 12 and 27. Copyright 2025 Alliance News Ltd. All Rights Reserved.
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