| Consensus | Consensus Range | Actual | Previous | |
| Composite Index | 52.5 | 52.5 to 52.5 | 52.5 | 52.2 |
| Services Index | 52.8 | 52.8 to 52.8 | 52.5 | 52.1 |
Highlights
The UK private sector strengthened moderately in August, with the composite PMI rising from 52.2 to 52.5, its highest level since April and the second consecutive month of expansion. Growth was primarily service-led, as the services PMI increased from 52.1 to a four-month high of 52.5, while manufacturing production expanded at its slowest rate in four months.
Improving domestic conditions, recovering business and consumer spending, and reduced client caution supported a second successive increase in new orders. Business expectations also reached their highest level since February, with 47 percent of service providers anticipating growth over the coming year. However, external demand remained fragile, as service exports declined for a sixth consecutive month amid subdued European demand and geopolitical uncertainty.
Labour-market conditions presented a more cautious picture. Although job losses slowed, service-sector employment declined for a twenty-third consecutive month, the longest contraction in the survey’s history. Hiring freezes, surplus capacity, automation and elevated costs continued to constrain recruitment.
Furthermore, accelerating fuel, wage, food, transport and technology costs prompted firms to raise prices to protect margins. Indeed, the recovery is gaining traction, but remains domestically driven and vulnerable to persistent inflation, weak exports and prolonged employment contraction. These updates leaves the RPI at 8 and the RPI-P at 18, meaning that economic activities based on the RPI continue to stay within the expectations of the UK economy.
Market Consensus Before Announcement
The consensus sees no revision in the final from the flash at 52.5 for composite and 52.8 for services.
Definition
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.
Description
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.