The UK composite rose to 53.8, up 1 point from July to signal an expansion of private industry. Higher levels of output were seen in both the manufacturing and service sectors due to a sustained upturn in employment for both. Inflationary pressures cooled with firms indicating the weakest rise in input costs since November 2020.

The service index rose 1.2 points to 53.7 in August. Although this signals an expansion of the industry, it is still slightly below the long-run average (54.4). Businesses linked increased output to an improved economic backdrop and a higher willingness to spend among consumers. Demand seems to be rising as it fell briefly during the run-up to the UK elections, with firms noting reduced political uncertainty helped boost spending among clients.

The UK RPI now stands at minus 4 and RPI-P is at plus 4, both showing economic activity generally is within market forecasts.

No revisions are expected to the flash data.

The Services Purchasing Managers' Index (PMI) provides an estimate of service sector business activity for the preceding month by using information obtained from a representative sector survey incorporating transport and communication, financial intermediation, business services, personal services, computing and IT and hotels and restaurants. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) activity versus the previous month and the closer to 100 (zero) the faster is activity growing (contracting). The data are compiled by the Chartered Institute of Purchasing and Supply (CIPS) and S&P Global.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the ISM non-manufacturing index in the U.S. and the S&P Global PMIs elsewhere, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.

The S&P Global PMI services data give a detailed look at the services sector, how busy it is and where things are headed. The indexes are widely used by businesses, governments and economic analysts in financial institutions to help better understand business conditions and guide corporate and investment strategy. In particular, central banks in many countries use the data to help make interest rate decisions. PMI surveys are the first indicators of economic conditions published each month and are therefore available well ahead of comparable data produced by government bodies.