Services lead ‘fragile and uneven’ business activity rebound
Business activity in the UK’s private sector enjoyed its strongest rebound in a year this month, but economists have cautioned the growth remains “fragile and uneven.”
S&P’s Global flash UK composite purchasing managers’ index (PMI) reached 53.0 in August, up from 51.5 in July and marking the highest score in 12 months.
Any score above 50.0 indicates activity is growing.
The growth was driven by a rebound in the services sector, which benefited from new work and rising sales both domestically and internationally.
It follows a weaker period for the business where conditions soured in the spring after President Donald Trump’s tariff onslaught disrupted demand overseas.
Chris Williamson, chief business economist for S&P Global Market Intelligence, said growth had “continued to accelerate over the summer after a sluggish spring”.
He added: “The services sector has led the expansion, but manufacturing also showed further signs of stabilising.”
Downturn continues for manufacturing
Whilst services – which make up the largest part of the UK’s economy – grew, manufacturing recorded the sharpest decline for new work since April.
Total workforce numbers also hit their 11th consecutive month of decline.
Williamson warned the demand environment was “uneven and fragile” due to “unease emanating from broader geopolitical uncertainty”.
Businesses have continued to feel the brunt of Rachel Reeves’ tax changes in the Autumn.
“Companies report concerns over the impact of recent government policy changes, as well as unease emanating from broader geopolitical uncertainty,” Williamson added.
This week government statistics showed 209 pubs were demolished or converted for other uses over the six months to June.
Hospitality bodies have urged the government to recognise the pressure firms are under after Reeves hiked employer’s national insurance contributions and raised the national minimum wage.
“Unsustainable tax increases are squeezing businesses, stifling growth and investment, and threatening local employment, especially for young people,” lobby groups wrote in a joint statement this week.