UK private sector activity grows at fastest pace in nearly two years

(Sharecast News) - Activity in the UK private sector grew in February at its fastest pace in nearly two years, according to a survey released on Friday. The S&P Global flash composite output index ticked up to 53.9 from 53.7 in January, marking the fastest rise in private sector activity since April 2024. A reading above 50.0 indicates expansion, while a reading below signals contraction.

This was driven by a sharper expansion of manufacturing production than at the beginning of 2026. S&P Global said service sector output growth eased fractionally since January, but continued to outpace that seen in manufacturing.

The flash services PMI business activity index edged down to 53.9 in February from 54.0 the month before. The manufacturing output index printed at 53.6, up from 51.6 and hitting a 17-month high.

The survey also showed that employment numbers fell for the seventeenth month in a row, led by another marked reduction in the service economy.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said: "The early PMI data for February bring further signs of an encouraging start to the year for the UK economy. A solid rise in output across manufacturing and services has been reported in both January and February, with the rate of expansion gaining pace. The survey data so far this year are consistent with GDP rising by just over 0.3% in the first quarter if this performance is sustained into March.

"The upturn continues to be led by the service sector but there are signs that manufacturing is regaining momentum to join in the recovery, reporting a surge in export orders of a magnitude not seen since the pandemic.

"Despite enjoying higher demand for goods and services, companies remain focused on boosting productivity to cut costs, resulting in yet another month of steep job losses to prolong the continual jobs downturn that was initiated by the 2024 autumn Budget."

Williamson said that higher staffing costs, often attributed to Budget policy changes, meant service sector inflation remained elevated. "However, increased competition, especially in the manufacturing sector, is helping keep a lid on inflationary pressures."