Source: Sharecast
The S&P Global flash UK PMI composite output index - which covers both the manufacturing and services sectors - rose to 53.0 from 51.5 in July, coming above the 50.0 mark that separates contraction from expansion.
It also marked the strongest output growth since August 2024, with a faster rise in service sector activity more than offsetting another marginal decline in manufacturing production.
Service providers pointed to improved demand conditions, while goods producers put lower output down to a lack of new work and intense competitive pressures.
The services PMI business activity index ticked up to 53.6 in August from 51.8 the month before, while the manufacturing output index was unchanged at 49.5.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said: "The flash UK PMI survey for August indicated that the pace of economic growth has continued to accelerate over the summer after a sluggish spring, the rate of expansion now at a one-year high. The services sector has led the expansion, but manufacturing also showed further signs of stabilising.
"It’s evident from survey measures of order books, however, that the demand environment remains both uneven and fragile. Companies report concerns over the impact of recent government policy changes, as well as unease emanating from broader geopolitical uncertainty. Goods exports are still falling especially sharply.
"Payroll numbers also continue to be cut at an aggressive rate by historical standards as firms cite weak order books and concerns over rising staff costs due to the policies announced in the autumn Budget, which also contributed to persistent inflation pressures.
"While the rise in business activity signalled by the PMI alongside the uplift in inflation to 3.8% in July lower the chances of further rate cuts this year, more data are required to assess both the sustainability of robust economic growth as well as the stickiness of the upturn in price pressures. Among a divided Bank of England rate setting committee, the perceived need for any future rate cuts will be very much data dependent."
