Source: Sharecast
The S&P Global services PMI business activity index rose to 52.5 from 52.1 in July. A reading above 50 indicates expansion, while a reading below signals contraction.
The survey also showed that employment numbers fell at the slowest pace since October 2025, helped by improved order books and more optimism towards the business outlook. However, a number of firms reported ongoing hiring freezes due to strong cost pressures and excess business capacity, with some also commenting on efforts to boost productivity through automation.
S&P Global said service sector workforce levels have now fallen for 23 months in a row, which is the longest continuous period recorded since the survey began in July 1996
Tim Moore, economics director at S&P Global Market Intelligence, said: "August data highlighted improving operating conditions across the UK service economy. Business and consumer spending saw further gains after declining during the second quarter of 2026, which led to the fastest expansion of output levels since April.
"Service providers are increasingly optimistic about the year ahead business outlook, with confidence levels now close to those seen just prior to the Middle East conflict. However, business activity growth projections were still subdued in comparison to long-run trends amid lingering worries about inflationary pressures and geopolitical tensions.
"Higher fuel prices and transportation bills reignited overall input cost inflation in August. Moreover, the rate of output charge inflation in the service sector also accelerated for the first time in four months as businesses sought to protect their margins from suppliers' price hikes.
"Many firms have responded to intense cost inflation by tightening their staff recruitment policies. This trend continued in August, but signs of a turnaround in sales pipelines and broader market conditions led to the slowest pace of job losses since October 2025."