The UK economy showed firmer momentum in August, with Composite PMI climbing from 51.5 to 53.0, its highest in a year. Services provided the bulk of the support, rising from 51.8 to 53.6, also a 12-month high, while manufacturing slipped further into contraction at 47.3, down from 48.0.
S&P Global’s Chris Williamson noted that the UK economy is enjoying its best pace of expansion since last summer, with the services sector driving activity. Manufacturing, though still weak, showed tentative signs of stabilization. However, demand environment remains both “uneven and fragile”, and businesses continue to shed staff at an “aggressive rate” amid pressure from rising costs.
The improved growth backdrop, alongside July’s stronger-than-expected inflation reading, reduces the likelihood of further BoE rate cuts this year. With the MPC split over the policy outlook, upcoming data on growth and inflation will be crucial in determining whether the central bank leans toward patience or resumes its easing path.
