UK PMI signals growth, even as services cut jobs

UK private-sector activity expanded for a second straight month in February, according to the latest flash purchasing managers’ index (PMI) survey, extending what the data provider described as an early-2026 rebound.

S&P Global’s flash UK Composite PMI Output Index rose to 53.9 in February from 53.7 in January, its highest reading since April 2024. Readings above 50 indicate expansion.

The composition of growth remains notable. The services PMI edged down to 53.9 from 54.0, while the manufacturing PMI rose to 52.0 from 51.8, an 18-month high. The survey also reported that total new work increased at the strongest pace since September 2024, with manufacturers’ new export work rising at its fastest pace in around four-and-a-half years.

Chris Williamson, S&P Global’s chief business economist, said: “The early PMI data for February bring further signs of an encouraging start to the year for the UK economy.”

On the survey’s own reading of the macro picture, the January and February results were consistent with economic growth of about 0.3% in the first quarter of 2026, compared with 0.1% in the final quarter of 2025.

But the labour signal remains a constraint. The report said staffing levels fell particularly sharply among services businesses, with some respondents citing redundancies or hiring freezes as employers absorbed higher payroll costs. The squeeze has been linked to higher employer social security contributions introduced from April 2025 — including changes to employer National Insurance announced in the Autumn 2024 Budget.

Some respondents also reported investing in technology in order to grow without additional recruitment, underlining a shift towards cost-led operating models even as demand improves.

For the Bank of England, the message is mixed. The survey reported that prices charged rose at the fastest pace since April, while cost burdens — though still elevated — increased at the slowest pace in three months. The MPC held Bank Rate at 3.75% in early February, with the next decision due on 19 March.

Friday’s PMI release also landed alongside firmer consumer data. The Office for National Statistics said retail sales volumes rose 1.8% month-on-month in January — the largest rise since May 2024 — offering another datapoint suggesting the economy has started 2026 on a stronger footing.