The UK private sector showed renewed momentum in October 2025, with the composite PMI rising to 51.1, signalling modest but broad-based growth. Services maintained steady expansion (51.1), while manufacturing output (49.6) posted its first rise in a year, marking a tentative industrial recovery. The upturn was driven by improving domestic demand and restocking activities, though export sales remained weak due to sluggish global conditions and the lingering effects of US tariffs.

Encouragingly, cost pressures eased, with input price inflation falling to an 11-month low, supported by softer raw material prices and a stronger sterling. This helped slow output charge inflation, particularly across services. Meanwhile, job losses moderated, as firms reduced redundancies and cautiously adjusted workforce levels amid signs of stabilisation.

Despite modest growth, business sentiment improved, with optimism reaching its second-highest level in a year, buoyed by expectations of stronger market conditions and new investments. However, concerns persist around consumer caution, political uncertainty, and global demand weakness, which continue to limit the recovery's strength. Overall, October's PMI data depict a fragile but improving UK economy, with easing inflation and stabilising employment offering cautious grounds for optimism ahead of the November Budget. The latest update takes the RPI to 13 and the RPI-P to 32, meaning that economic activities are now ahead of expectations in the UK.

The composite index is expected at 50.7 versus 50.1 in September final. Manufacturing is seen at 46.7 versus 46.2 and services at 51.1 versus 50.8.

The flash Composite Purchasing Managers’ Index (PMI) provides an early estimate of current private sector business activity by combining information obtained from surveys of the manufacturing and service sectors of the economy, around 650 companies in each case. The flash data are released around ten days ahead of the final report and are typically based upon around 75-85 percent of the full survey sample. Results covering a range of variables including manufacturing output, employment, new orders, backlogs and prices 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 report also contains flash estimates of the manufacturing and services PMIs. The survey is produced by 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 purchasing managers' surveys, investors will know what the economic backdrop is for the various markets. The flash PMIs are particularly closely watched as they provide a wide ranging look at economic developments and some of the most up to date information available. 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.