UK private sector activity gained momentum in December, ending 2025 on a stronger note as demand conditions improved. The UK composite output index rose to 52.1 from 51.2 in November, a two-month high, signalling a moderate acceleration in output growth. Both major sectors contributed to this upturn. The services PMI increased to 52.1 from 51.3, while manufacturing strengthened markedly, with the PMI climbing to 51.2 from 50.2, its highest level in 15 months.

The recovery was driven by the sharpest rise in new business since October 2024, reflecting improved client confidence and a gradual strengthening of sales pipelines, particularly in services. Notably, new export orders expanded for the first time in 13 months, and backlogs of work rose slightly for the first time since February 2023, indicating emerging capacity pressures.

Despite firmer output, employment continued to contract for a fifteenth consecutive month as firms grappled with intense cost pressures and lingering uncertainty. Inflationary signals also strengthened, with input costs rising at the fastest pace since May and output prices rebounding to their highest level since August.

In summary, the latest data suggest a tentative demand-led recovery, tempered by persistent labour shedding and mounting cost pressures. These updates take the RPI and RPI-P to minus 2, meaning that economic activities are now within the expectations of the UK economy.

The composite is expected at 51.6 in the December flash versus 51.2 in November final. Manufacturing seen at 50.8 versus 50.2 in November. Services expected at 51.8 versus 51.3 in November.

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.