UK private sector activity expanded at its fastest rate since February during October, according to early purchasing managers’ survey results that nevertheless indicate persistent inflationary pressure. The flash composite output index rose from 52.0 in September to 53.1, pointing to a firmer start to the fourth quarter for both services and manufacturing businesses.
S&P Global Market Intelligence said its October survey showed business activity increasing for a fourth consecutive month. An index reading above 50 indicates expansion in the surveyed activity compared with the previous month, while a figure below 50 indicates contraction. The reading therefore reflects the breadth of reported change, not a direct percentage increase in national economic output.
The initial sector results indicated that services activity had its strongest expansion since February, while manufacturing output recorded the largest increase since September 2024. New orders at service providers also improved, supported partly by a reported rise in export sales after several months of weakness. Manufacturing businesses reported an upturn in new orders as well.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said the survey suggested the economy had regained momentum. A statistical comparison of the PMI with official GDP data was consistent with quarterly growth of about 0.7%, although that is an indicative relationship rather than an Office for National Statistics forecast or measured GDP outcome.
The figures contain a potentially encouraging employment signal. Survey respondents indicated that businesses had begun taking on additional workers after a prolonged period of caution. That should be considered alongside official labour-market data, which describe different reference periods and use different methods. A monthly business survey can identify a change in sentiment before it is visible in broader employment statistics, but does not establish a durable hiring recovery.
Companies continued to report high cost pressures. S&P warned that elevated output prices could complicate monetary policy, with businesses facing the combined effects of energy-market volatility, international conflicts and domestic economic uncertainty. Faster growth can coexist with inflationary pressures when customers place more orders but suppliers and employers face higher costs.
The timing of the survey is important because the Chancellor is due to deliver the Budget on 28 October. Some respondents reported delaying expenditure until fiscal policy became clearer. That caution can affect capital investment, recruitment and discretionary spending even when companies are experiencing stronger short-term demand.
For manufacturers, an increase in order volumes may help utilisation and operating efficiency, but profitability also depends on input prices, production capacity and the ability to pass higher costs through to customers. Service providers face their own balance between demand, employee expenditure and contract pricing. A positive headline index cannot answer whether margins are improving across the economy.
Purchasing managers report changes before many official statistics are released. The diffusion index measures the balance of respondents reporting expansion rather than the percentage change in GDP, while initial flash results can change when later responses arrive. Economists generally examine several months of readings alongside output, employment and inflation data before drawing conclusions about the underlying trend.
There is also a difference between stronger activity and improved financial confidence. An order booked today may still be delivered at a narrow margin if labour, transport or materials costs continue to rise. The combination of expanding workloads and high prices can leave businesses with more operational demands but little spare cash for investment. Monitoring both sales pipelines and profitability is important when interpreting encouraging output surveys.
October’s figures offer evidence of resilience during a period of policy and geopolitical uncertainty. Whether that momentum continues will depend on the Budget, financing conditions, customers’ spending capacity and the degree to which increased costs can be absorbed without disrupting investment. The next readings will show whether the expansion is sustained rather than a temporary recovery in orders.
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