Data released by S&P Global/CIPS showed that activity growth in the UK private sector accelerated in August, reaching the highest level since April, and exceeded economists' forecasts, helped by a sustained upturn in private sector employment.
The UK composite PMI rose to 53.8 points from 52.8 points in August. Economists had expected an increase to 53.4 points. Meanwhile, the services PMI increased to 53.7 points (the highest reading since April) from 52.5 points in July. Consensus estimates suggested an increase to 53.3 points. Both indices remain above the 50-point mark, which indicates an expansion of activity in the sector, for the 10th month in a row.
The report showed that survey respondents typically linked rising business activity to the improving economic backdrop and an associated rise in willingness-to-spend. New orders in the services sector rose again in August, but the pace of growth slowed slightly after reaching a 14-month high in July. Meanwhile, export sales were relatively subdued in August - the growth rate was the weakest since October 2023. Brexit-related trade difficulties were again cited as holding back sales to EU clients. Backlogs of work fell again in August, recording the sharpest decline in 12 months. Employment in the service sector grew for the eighth month in a row, due to increased workload and long-term expansion plans. As for the inflationary situation, the overall rate of input cost inflation eased to its slowest since January 2021, while prices charged inflation dropped to a three-and-a-half year low. Meanwhile, business activity expectations for the year ahead remained upbeat, but the degree of confidence moderated since July.