UK private-sector growth strengthened modestly in August, with PMI Composite Output rising from 52.2 to 52.5, a four-month high. PMI Services Business Activity improved from 52.1 to 52.8, reaching a six-month high and providing the main lift. Manufacturing moved the other way. PMI Manufacturing eased from 51.9 to 51.5, while PMI Manufacturing Output fell from 52.9 to 51.2, both five-month lows.
S&P Global said sunny weather and technology investment supported activity, while manufacturing lost some momentum as precautionary stock building faded. Business confidence improved to its strongest since Middle East war began, and job losses moderated. But cost pressures remained elevated, driven by energy prices, supply-chain disruption and high staffing costs. S&P Global estimated the survey was consistent with around 0.3% q/q GDP growth in Q3.
For BoE, August PMI points to resilient growth but an uncomfortable inflation backdrop. Stronger services activity reduces urgency to support economy, while persistent cost pressure argues against an early dovish turn. S&P Global said Bank is likely to retain a hawkish bias but stay cautious, holding off on further hikes until growth and inflation signals become clearer.
Data Summary
| Component | Current | Previous | Trend |
|---|---|---|---|
| PMI Composite Output | 52.5 | 52.2 | 4-month high |
| PMI Services Business Activity | 52.8 | 52.1 | 6-month high |
| PMI Manufacturing | 51.5 | 51.9 | 5-month low |
| PMI Manufacturing Output | 51.2 | 52.9 | 5-month low |
Key Takeaways
- UK PMI Composite Output rose from 52.2 to 52.5 in August, reaching a four-month high.
- PMI Services Business Activity strengthened from 52.1 to 52.8, a six-month high and main driver of faster overall growth.
- Manufacturing lost momentum. PMI Manufacturing fell from 51.9 to 51.5, while PMI Manufacturing Output dropped from 52.9 to 51.2.
- S&P Global said sunny weather and technology investment supported activity. Earlier precautionary stock building in manufacturing started to fade.
- Business confidence improved to its strongest level since Middle East war began, while job losses became less severe.
- Cost pressures remained high due to energy prices, Middle East-related supply disruption and staffing costs.
- Survey was consistent with around 0.3% q/q GDP growth in Q3.
- For BoE, resilient growth and elevated costs support a hawkish bias, but softer manufacturing and lingering uncertainty argue for patience before another hike.
