Business growth accelerates to four-month high amid hot weather boost

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UK business growth picked up further in August as warm weather helped support a recovery from service sector firms, figures show.

The closely watched S&P Global flash UK composite purchasing managers’ index (PMI) reported a reading of 52.5 for the month, rising from 52.2 in July.

The flash figures, which are based on preliminary data, pointed to the strongest growth since April.

Any score above 50.0 indicates activity is growing while any score below means it is contracting.

The reading is stronger than expected, with economists having predicted a rise of 51.5 for the month.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said: “The UK economy picked up a bit more pace in August, adding to signs that we should see solid economic growth of around 0.3% in the third quarter.

“The expansion is being helped by sunny weather and tech investment, though as expected we have seen some softening of growth in the manufacturing sector as precautionary stock building cools.

“This reflects easing concerns, for now, over the economic impact of the war in the Middle East.”

Activity in the manufacturing sector slipped to a reading of 51.5 for August, representing the slowest growth for five months as increased cost pressures dragged on trading.

This slowdown was offset by an improving picture in the service sector, which saw growth lift to a six-month high.

Surveyed companies said they witnessed a “steady upturn” in client confidence as well as improving domestic economic conditions after the appointment of Andy Burnham as Prime Minister last month.

Improving conditions led to the strongest rise in new business since February.

However, firms indicated that they are facing pressure from inflation, with average cost burdens increasing “sharply” for the month, particularly in the service sector.

Companies particularly highlighted higher fuel prices and efforts by suppliers to pass on their increased transport costs.

Thomas Pugh, chief economist at RSM UK, said: “If we’re not careful, we might have to stop talking about resilience and actually start talking about a reasonable economic performance this year.

“A further rise in the S&P Global flash UK PMI in August points to the economy growing by about 0.3% in Q3.

“What’s more, consumer confidence rose this month to its highest level in two years.”