UK Services Sector Shows Resilience Despite Rising Costs

The UK services sector showed signs of resilience in August, according to the S&P Global UK Services Purchasing Managers' Index (PMI). The final reading came in at 52.5, up from 52.1 in July and marking its strongest growth since April. However, more firms reported rising prices and input costs increased after a slowdown in both measures in July.

The Bank of England is keeping a close eye on these developments as it tries to gauge how much of the surge in energy prices caused by the Middle East conflict will be passed on and push up inflation. Despite this concern, optimism among services firms rose to its highest level since February.

Employment decreased at the slowest pace since October 2025, thanks to improved sales pipelines and broader market conditions. The composite PMI, which includes the smaller manufacturing sector, also rose to 52.5 from 52.2 in July, marking its highest reading since April.