- Composite PMI rose to a 22-month high in February.
- Manufacturing output strengthened while services eased slightly.
- Employment fell for the 17th straight month.
UK private sector growth gathered pace in February, with fresh PMI data pointing to stronger output across manufacturing and services even as companies continued to cut jobs. The latest S&P Global survey showed the UK PMI and UK economic growth picture improving, offering signs of momentum at the start of the year.
The Flash UK PMI Composite Output Index rose to 53.9 in February from 53.7 in January, marking its highest level in 22 months. Manufacturing appeared to drive much of the improvement, while the services sector — still the main engine of the economy — showed a slight cooling.
Manufacturing output climbed to 53.6 from 51.6, a 17-month high, suggesting factories are seeing stronger demand. Services output slipped marginally to 53.9 from 54.0, a two-month low, though still comfortably in growth territory.
New orders increased for the third consecutive month, with manufacturers reporting the fastest rise in export orders in four-and-a-half years. Export growth in services was more modest by comparison.
Despite the stronger demand, employment fell again, extending the current run of job losses to 17 months. The services sector saw particularly sharp declines, with companies citing redundancies, hiring freezes and greater use of technology to maintain output without adding staff.
Inflation pressures linger as rate cut hopes build
Input costs remained high, though inflation eased to a three-month low. At the same time, output price inflation picked up — especially in services — reflecting higher wages and supplier costs.
Chris Williamson, chief business economist at S&P Global Market Intelligence, reportedly said, as quoted in a news report, that the early PMI data suggest an encouraging start to the year for the UK economy, with output rising across both major sectors. He added that the survey data are consistent with GDP increasing by just over 0.3 per cent in the first quarter if the trend continues into March.
Williamson reportedly noted that while the recovery is still led by services, manufacturing appears to be regaining momentum, pointing to export growth not seen since the pandemic period.
He also said companies remain focused on improving productivity to cut costs, which is contributing to continued job losses that began after the 2024 autumn Budget. Higher staffing costs linked to policy changes are keeping service sector inflation elevated, although stronger competition — particularly in manufacturing — is helping to contain broader price pressures.
According to Williamson, policymakers at the Bank of England may take some encouragement from stronger growth signals, but modest price pressures alongside labour market weakness could strengthen calls for further rate cuts.
