The latest survey from S&P Global/CIPS showed that business activity in the private sector improved in August, and reached a 4-month high, supported by a robust upturn in new order intakes and the strongest employment growth since June 2023.
The UK composite PMI rose to 53.4 points (the highest reading since April) from 52.8 points in July. Consensus estimates suggested an increase to 52.9 points. The index remains above the 50-point mark, which indicates an expansion of activity in the private sector, for the 10th month in a row. The services PMI rose to 53.3 points (4-month high) from 52.5 points in July, while the manufacturing PMI rose to 52.5 points (26-month high) from 52.1 points. Economists had expected the services PMI to rise to 52.8 points and the manufacturing PMI to remain at 51.1 points.
Data showed that new orders in the private sector increased at a robust pace in August, which continued the upward trend seen since December 2023. However, new export orders declined slightly, which was due to another decline in export sales in the manufacturing sector. Manufacturers of goods referred to weak demand from customers from the EU. The data also signaled the fastest reduction in backlogs of work since November 2023. This mostly reflected a sharp fall in unfinished business in the service economy. Meanwhile, private sector employment continued to grow in August, recording the strongest growth in 14 months. Business activity expectations for the year ahead were relatively upbeat in both the manufacturing and service sectors, despite easing since July. As for the inflationary situation in the private sector, input price inflation has fallen to its lowest level in the last 3.5 years. Efforts to pass on rising input costs led to another robust increase in average prices charged by private sector firms. However, the latest rise was among the slowest seen since the start of 2021.