UK service sector sees strongest growth in 16 months

The UK service sector recorded a solid upturn in August, with the S&P Global UK Services PMI Business Activity Index rising to 54.2, its highest level in 16 months, up from 51.8 in July, data released by S&P Global showed on Wednesday.

New orders increased sharply, supported by both domestic and export markets, while business expectations hit a ten-month high.

Despite robust output growth, employment remained a weak spot, declining for the eleventh consecutive month amid rising payroll costs, hiring freezes, and investment in automation. Input costs accelerated, driven by higher National Insurance contributions, food, and technology prices, while prices charged continued to rise despite margin pressures.

Looking ahead, 49 per cent of firms expect activity to increase over the next year, signalling the strongest business optimism since October 2024, although subdued domestic demand and policy uncertainty remain challenges.

Attribution: Amwal Al Ghad English

Subediting: Y.Yasser