UK Activity Index Rises to 53.1 Points in October at Fastest Pace Since February
Key Facts
The UK’s preliminary composite activity index rose to 53.1 points in October, from 52.0 points in September, recording its fastest pace of growth since February, according to an S&P Global survey. The index reading indicates expanding activity, while this month’s increase reflects an improvement on the previous month. The reading came amid mixed indicators for the UK economy, as business data showed stronger demand while retail sales recorded a monthly decline in September. Input cost pressures also remained present in the manufacturing and services sectors. The figures offer a picture combining improved business activity with signs of continued pressure on companies and households.
S&P Global said services sector orders rose strongly, with export sales recording their first increase since February, while new orders in manufacturing also improved. The stronger demand encouraged companies to increase staffing for the first time since September 2024. The rise in employment was driven by the services sector, while manufacturing companies cut staff numbers slightly. By contrast, input cost inflation accelerated in both sectors in October. Companies attributed higher costs to energy, fuel, shipping and other inputs, according to the survey.
On the consumption side, retail sales volumes fell 0.4% in September, after rising 0.7% in August, according to the Office for National Statistics. However, sales volumes increased 0.7% in the third quarter compared with the second quarter. This means quarterly performance remained positive despite the decline in the final month of the quarter. In the labour market, the unemployment rate among people aged 16 and over stood at 4.7% in the period from June to August 2026. The rate fell 0.1 percentage points from the previous quarter, according to the office.
Price data continue to provide the backdrop to debate over monetary policy; the consumer price index rose 3.5% in the 12 months to September, compared with an annual increase of 3.1% in August. The Bank of England said inflation stood at 3.1% in August and expected it to continue rising over the following quarters as a result of the energy shock. At its meeting ending on 16 September, the Monetary Policy Committee kept the interest rate at 3.75% by a majority of 6 to 3. Three members voted to raise the rate by 0.25 percentage points to 4%. The acceleration in companies’ input costs in October comes against this backdrop of rising prices and mixed activity indicators.
The euro area reading provides an additional comparison for UK activity: the preliminary composite output index fell to 51.9 points in October from 53.1 points in September. The index remained above the 50-point level, indicating continued expansion for a fourth consecutive month, but at a slower pace than in the previous month. Looking ahead, the Treasury confirmed that the UK’s 2026 Budget will be delivered on 28 October. The Bank of England will hold its next monetary policy meeting on 5 November, while the next labour market data release is due on 17 November. The next inflation data are due on 18 November, according to the Office for National Statistics.