The latest UK PMI suggests business activity is on steadier ground with the Flash UK Composite Output Index hitting a 21-month high. This was led by a robust and accelerated upturn in service sector activity, S&P Global said.
January data also signalled a sustained improvement in new order intakes across the private sector economy, which contributed to the most upbeat level of business optimism for 16 months. However, strong input cost inflation persisted, which resulted in the greatest increase in average prices charged by private sector firms since August 2025.
A number of survey respondents suggested that post-Budget clarity had led to the release of new projects and helped to boost investment spending among clients, despite subdued projections for the broader UK economic outlook.
“The good news was tempered, however, by the upturn in order books failing to stem a steep loss of jobs, which companies commonly blamed on the need to reduce high costs,” said Chris Williamson, chief business economist at S&P Global Market Intelligence
“These cost pressures were again often linked to government policies relating to higher National Insurance contributions and the National Minimum Wage, and led to an especially steep drop in hospitality jobs.”