UK services activity strengthened in August, with PMI Services rising from 52.1 to 52.5, highest since April and extending recovery from Q2 soft patch. New business increased for second straight month as firms reported improving business and consumer spending alongside firmer investment sentiment. Domestic demand drove improvement, while export sales fell for sixth consecutive month amid subdued European demand and geopolitical uncertainty. PMI Composite also rose from 52.2 to 52.5, its highest since April, as faster services growth offset softer manufacturing output growth.
Labour conditions remained weak despite better demand. Services employment declined for a 23rd consecutive month, longest uninterrupted sequence since survey began in 1996, although pace of job losses eased to weakest since October 2025. Firms continued to cite high costs, excess capacity, hiring freezes and greater use of automation. At same time, business confidence improved for a third month to highest since February, with 47% of firms expecting activity to rise over coming year against 13% anticipating decline. S&P Global’s Tim Moore said improving sales pipelines had led to “slowest pace of job losses since October 2025.”
Inflation pressures were less encouraging. Services input-cost inflation accelerated from July’s five-month low as fuel, transport, wages, food and technology costs increased, while output-charge inflation strengthened for first time in four months as firms sought to protect margins. Moore said higher fuel and transport bills had “reignited overall input cost inflation” in August. Overall, survey points to a firmer UK growth backdrop heading deeper into Q3, but recovery remains accompanied by continued workforce reductions and renewed cost pressure.
Data Summary
| Indicator | August | July | Trend |
|---|---|---|---|
| PMI Services | 52.5 | 52.1 | Growth accelerated to four-month high |
| PMI Composite | 52.5 | 52.2 | Growth accelerated to four-month high |
Components
| Component | Trend |
|---|---|
| Services new business | Rose for second straight month |
| Services export sales | Fell for sixth straight month |
| Services employment | Fell for 23rd straight month; slowest decline since October 2025 |
| Services business confidence | Rose for third month to highest since February |
| Services input prices | Inflation accelerated from July’s five-month low |
| Services output prices | Inflation accelerated for first time in four months |
| Composite output | Growth accelerated to fastest since April |
| Manufacturing output | Growth slowed to four-month low |
| Composite input prices | Inflation accelerated sharply |
| Composite business confidence | Improved to highest since February |
Key Takeaways
- UK PMI Services rose from 52.1 to 52.5, marking fastest expansion since April and extending recovery from Q2 weakness.
- PMI Composite increased from 52.2 to 52.5, also reaching highest since April.
- Domestic demand improved, with firms reporting firmer business and consumer spending and better investment sentiment.
- Export demand remained weak, with services export sales falling for a sixth consecutive month.
- Employment remained a major soft spot. Services firms cut staff for a 23rd straight month, longest continuous decline since survey began in 1996, though pace of job losses slowed to weakest since October 2025.
- Business confidence improved for a third month and reached highest since February.
- Inflation pressures reaccelerated, with higher fuel, transport, wages, food and technology costs lifting input prices, while output-charge inflation also strengthened.
- S&P Global’s Tim Moore said higher fuel and transport bills had “reignited overall input cost inflation”, leaving August mix stronger on growth but still uncomfortable on employment and prices.
