UK businesses entered August with turnover still under pressure and concern about labour and energy costs elevated, according to the latest official snapshot of trading conditions.
The Office for National Statistics’ Business Insights and Conditions Survey found that 15% of trading businesses reported higher turnover in July compared with the previous month, while 22% reported a decrease. Both measures were broadly unchanged from June.
Economic uncertainty remained the most commonly reported challenge affecting turnover, cited by 29% of trading businesses in August. That was three percentage points lower than in July, but four points higher than a year earlier.
Larger employers reported a different pressure at the top of the list. Among businesses with 10 or more employees, labour costs were the leading turnover challenge, cited by 35%.
Expectations for September were evenly balanced. Fifteen per cent of trading businesses expected turnover to increase, while the same proportion anticipated a decrease. The share expecting a fall was three percentage points below the corresponding figure for August.
Input-price pressure has eased from earlier peaks but remains widespread. More than a quarter of trading businesses — 27% — reported an increase in the price of goods and services bought during July. Fourteen per cent expected to raise their own selling prices in September.
Energy is becoming more prominent in those calculations. A quarter of businesses considering price increases identified energy prices as a factor, eight percentage points higher than the equivalent figure for September 2025.
Separately, 61% of businesses reported some degree of concern about energy prices in early August, up four percentage points from late July. One in ten identified energy as their principal concern for September, twice the proportion recorded for August.
The figures describe an environment in which the pace of some cost increases has moderated without removing the pressure on margins. Businesses facing weak demand have less freedom to lift prices, particularly where customers remain price-sensitive.
Labour creates a different constraint from commodities or freight because payroll costs are relatively difficult to adjust quickly. Suppliers can sometimes be changed, orders delayed, or inventories reduced; established workforces are less flexible without affecting capacity and skills.
That helps explain the greater prominence of employment costs among organisations with at least 10 staff. Changes to wages, employer taxes, pensions, and benefits are multiplied across larger workforces and become material influences on recruitment and investment decisions.
Energy exposure has broadened beyond traditionally intensive sectors. Retailers, hospitality operators, warehouses, offices, logistics businesses, and service companies all carry direct energy costs, while transport and supplier prices transmit changes indirectly across the economy.
The interaction between costs and demand is particularly important. Companies with strong order books can pass through a greater proportion of higher expenses. Businesses operating in competitive markets or facing cautious customers may instead absorb part of the increase through lower margins.
That trade-off can affect investment. Capital spending intended to improve productivity or reduce energy use requires cash upfront, yet businesses under margin pressure may be reluctant to commit until the demand outlook becomes clearer.
The survey does not cover every part of the economy. Finance and insurance, agriculture, oil and gas extraction, energy generation and supply, public administration, and publicly provided health and education are among the activities excluded from its sampling frame.
The ONS also classifies the survey as official statistics in development. The latest wave was live from 3 to 16 August and received 9,826 responses from a sample of 38,606 businesses, producing a response rate of 25.5%.
Trading status itself remained stable. Ninety-four per cent of responding businesses were trading in early August, including 84% operating fully and 10% operating partially. Four per cent had temporarily paused trading, while 2% reported that they had permanently ceased.
The latest release therefore points to persistence rather than a sudden deterioration. More businesses continued to report falling turnover than growth, economic uncertainty remained widespread, labour costs dominated the concerns of larger employers, and anxiety about energy moved higher.
September expectations indicate neither a broad rebound nor a severe contraction. Instead, many companies are entering another period in which margin control, pricing decisions, workforce costs, and selective investment will determine how effectively they can manage subdued demand.
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