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U.K. private sector activity expanded at its fastest pace in nearly two years during February, driven by a strong rebound in manufacturing output and a sustained recovery in new business, according to flash PMI data released on Friday.
The S&P Global Flash UK Composite Output Index rose to 53.9 in February from 53.7 in January, marking the strongest expansion in 22 months and remaining firmly above the 50.0 threshold that separates growth from contraction.
Growth dynamics across sectors were mixed but broadly supportive. The Flash UK Services PMI Business Activity Index edged slightly lower to 53.9 from 54.0, a two-month low, but still pointed to solid expansion. In contrast, manufacturing showed notable strength. The Flash UK Manufacturing Output Index jumped to 53.6 from 51.6, reaching a 17-month high, while the Flash UK Manufacturing PMI climbed to 52.0 from 51.8, its strongest reading in 18 months.
The acceleration in overall activity was underpinned by a robust rise in new work. New orders increased for a third consecutive month at the fastest pace since September 2024, as companies reported improving domestic demand and a recovery in export markets. Many firms cited stronger sales pipelines and a pickup in new customer enquiries as key drivers of growth.
Manufacturing benefited in particular from a surge in export orders, which rose at the fastest rate in four and a half years. Goods producers reported broad-based gains in overseas demand, supported by higher sales to the United States, Europe, and Asia. By contrast, service providers saw only modest growth in foreign demand, with some respondents pointing to continued softness in sales to EU markets.
Despite stronger output and rising new orders, employment conditions remained weak. Payroll numbers fell for the seventeenth consecutive month, with service sector firms reporting a sharp decline in staffing levels. Companies cited redundancies, hiring freezes, and margin pressure linked to higher costs, while some noted increased investment in technology to support growth without expanding headcount.
Capacity pressures also remained subdued. Backlogs of work continued to fall across both manufacturing and services, extending a trend in place since May 2023 and signaling limited strain on operational capacity.
Cost pressures persisted, although inflation showed tentative signs of easing. Input costs rose sharply in February, but the rate of increase slowed to a three-month low. Service sector firms reported steep rises in expenses, largely driven by wage growth, alongside higher technology and supplier costs. Manufacturers pointed to rising commodity prices, particularly for copper and other metals.
In response, prices charged by private sector firms increased at the fastest pace since April 2025, led by the services sector. Businesses attributed higher selling prices to increased labor and supplier costs, though competitive pressures were still cited as a constraint on margins.
Looking ahead, business confidence remained strong. Private sector firms expressed optimism about activity over the next 12 months, despite sentiment easing slightly from January’s 16-month high. Manufacturers stood out, with production expectations rising to their highest level in one and a half years, supported by anticipated export growth and plans for international expansion.
