UK services activity recorded its fastest expansion in over a year last month, driven by a surge in new orders that signalled renewed momentum in the country’s largest economic sector.
The S&P Global/CIPS UK Services Purchasing Managers’ Index (PMI) rose to 54.2 in August, up from 51.8 in July. The figure marked the strongest reading since April 2024, comfortably above the 50-point threshold separating expansion from contraction. Growth was underpinned by higher demand across business services, hospitality, and transport.
Tim Moore, economics director at S&P Global Market Intelligence, said: “August data signalled the fastest expansion of UK service sector activity for 16 months. Survey respondents often noted that rising business and consumer spending had underpinned the latest upturn in demand.”
The improvement comes as the government prepares its Autumn Budget, with Chancellor Rachel Reeves warning that borrowing costs remain high. Analysts said the PMI data may ease some concern about the resilience of domestic demand amid tighter fiscal conditions.
Inflationary pressures appeared more contained in August. Input cost inflation slowed to its weakest pace since late 2020, though businesses continued to highlight higher wage bills. Output charges rose at a modest pace, suggesting price pressures may be easing, a factor closely watched by the Bank of England.
Exports provided further support, with new business from overseas clients rising at the fastest rate since March 2022. Panellists linked the gains to stronger demand from North America and Europe, helping offset recent weakness in goods exports.
The services sector accounts for nearly 80 per cent of UK GDP, meaning shifts in its performance weigh heavily on broader growth prospects. Economists said the latest survey offered a timely signal that the economy may avoid a sharper slowdown despite looming fiscal tightening.
