The latest S&P Global survey shows the UK private sector expanding at a solid clip, powered by sunny weather and a services industry that will not quit. The numbers landed well ahead of what economists had braced for, and they suggest the country's momentum is still very much alive. The purchasing managers' index, known as PMI, is a quick snapshot of how the private sector is doing.
Any reading above 50 signals expansion, and August's 52.5 shows growth with room to spare. That beat the 51.6 that economists had predicted, and it follows a first half of the year that already turned heads. The UK expanded by 1% in the first six months of 2026.
The PMI is compiled from surveys of purchasing managers at around 800 companies. A reading above 50 indicates expansion, while below 50 signals contraction. The composite index combines services and manufacturing, with services having a larger weight in the UK economy.
In the first half of 2026, the UK economy grew by 1%. That was partly due to a rebound in consumer spending and business investment, though the manufacturing sector has lagged throughout the year.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said, "the August figure points to 0.3% growth for the third quarter." That is three times the 0.1% that forecasters had expected. The strong services sector did most of the heavy lifting. Companies reported that households and businesses were spending more at home, and the outlook for future output reached a six-month high. Williamson credited the boost to favorable weather and a wave of tech investment.
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This resilience is notable because the UK has historically seen growth cool in the second half of the year. The August data, however, suggests the third quarter might avoid that seasonal slowdown, giving policymakers more room to maneuver. The timing could not be much better for the new government, which is preparing its first budget this autumn.
A resilient economy provides a friendlier backdrop, and consumer confidence is also on their side. A GfK survey released on Friday showed sentiment at its highest level in two years, a lift that some are calling a "bounce" in public mood.
That optimism matters because the economy is not exactly cruising. It is coping with higher energy costs and the usual uncertainty that comes with a new government finding its footing. Historically, UK growth has also tended to weaken in the second half of the year, so the August numbers are a welcome surprise.
Not every part of the economy is celebrating. Input prices are climbing faster than they were in July, and companies are passing those costs along. Oil prices above $90 per barrel are a big reason, with fuel costs feeding through the supply chain.
Williamson pointed to the Middle East conflict and worries about domestic government policy as ongoing drags on growth. He also flagged persistent cost pressures from energy prices, supply disruptions tied to the region, and high staffing costs.
The jobs picture is mixed too. Employment has now declined for 23 straight months, the longest stretch since records began in 1996. But the latest drop was the smallest since October last year, which suggests the bleeding is slowing.
The bottom line: The UK economy is showing more fight than anyone expected. The services sector is carrying the load, consumers are feeling better, and the new government has a decent runway into its first budget. The risks are real, especially around energy costs and manufacturing, but for now the data says Britain is holding its own.
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