UK composite PMI falls from one-year high

The S&P Global Flash UK Services PMI fell to 51.9 in September 2025 from 54.2 in August—the highest since April 2024—and came in well below forecasts of 53.5. The reading pointed to a notable slowdown in the services sector, despite reports of stronger business and consumer spending in some areas. Overall momentum remained constrained by subdued UK economic conditions and heightened geopolitical uncertainty.

Service providers continued to face intense cost pressures, with respondents citing elevated wage bills, particularly linked to higher National Insurance contributions, as well as rising energy costs, food prices, and technology expenses. This pushed operating expenses sharply higher, leading firms to pass costs onto customers.

Prices charged by service providers rose solidly, with inflation only marginally below the year-to-date average. Confidence weakened, however, as clients’ tighter budgets and a fragile economic outlook weighed on expectations for the year ahead.

The S&P Global UK Manufacturing PMI dropped to 46.2 in September, down from 47.0 in August and missing forecasts of 47.1, according to the flash estimate. The reading signaled the steepest contraction since April, with output shrinking at the fastest rate in six months.

Respondents highlighted broad-based weakness in both domestic and export demand, with particular strain in the automotive sector following supply chain disruptions and stoppages at Jaguar Land Rover plants.

Employment continued to decline as manufacturers sought to contain costs, while factory gate price inflation fell to its lowest since December 2024 amid competitive pressures and discounting. Despite the downturn, manufacturers’ confidence rose to its highest since February, underpinned by investment plans and hopes for a recovery in order flows later this year.

The S&P Global Composite PMI for the UK fell to 51 in September from August’s one-year high of 53.5, missing the consensus of 53. The slowdown reflected weaker service activity and a deeper industrial slump, together signaling the slowest expansion in private-sector activity since May.

New business rose only modestly, with export sales subdued due to softer demand from both the EU and US. Many firms reported client caution and budget constraints, forcing them to rely on backlogs of work to sustain output. Cost burdens climbed sharply once again, driven by wage pressures tied to higher payroll contributions, which in turn led to further increases in selling prices. Employment levels declined for the eleventh consecutive month, underscoring ongoing strain in the labor market.

Looking ahead, businesses remained optimistic about growth, though confidence eased compared to last month as economic headwinds and geopolitical risks persisted.