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Business activity in the UK surged in August, reaching its highest level since April, according to a survey released on Wednesday. The S&P Global purchasing managers' index composite output index increased to 53.8, up from 52.8 in July.
The services PMI business activity index also rose to 53.7 in August, compared to 52.5 the previous month, marking the tenth consecutive month above the neutral 50.0 threshold that separates contraction from expansion.
Tim Moore, economics director at S&P Global Market Intelligence, noted that the data for August reflected a rebound in the UK service sector. Improving economic conditions and domestic political stability have bolstered customer demand. A notable increase in new business was observed following a period of slower decision-making earlier in the summer. This led to the fastest growth in service sector activity since April and extended the current period of expansion to ten months.
In response to the uptick in business conditions, service providers hired additional staff in August. Job creation rates remained robust, surpassing the average observed in the first half of 2024, despite challenges such as limited candidate availability and high wage pressures.
Higher salaries contributed to a sharp rise in cost burdens across the service sector. However, the overall rate of input price inflation fell to its lowest level since January 2021. The survey also indicated that the rate of increase in average prices charged was the slowest in three-and-a-half years, signaling signs of softer inflationary pressures within the service sector.
