UK business activity expanded at its fastest pace in eight months during October, according to preliminary data, offering an encouraging backdrop ahead of the government's Budget announcement later this week. The S&P Global flash UK composite purchasing managers' index recorded a reading of 53.1 for October, up from 52 in September and marking the strongest performance since February. The figure significantly exceeded economists' expectations of 51.7, with any score above 50 indicating expanding activity.
The growth was driven by both manufacturing and services sectors, with total new work across the private sector rising at its fastest rate since September 2024. Companies cited a general recovery in customer demand, with some pointing to artificial intelligence investments and demand for technology services as supporting sales. Others attributed improved activity to receding risk aversion and resilient global economic conditions. However, numerous businesses reported headwinds from geopolitical uncertainty and weak consumer confidence.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said the data showed a promising economic picture that could support robust growth through winter, provided the Budget did not contain adverse surprises on tax and spending. He noted, however, that geopolitical risks such as potential conflicts in the Middle East and Ukraine continued to unsettle businesses by adding to energy market volatility. He also highlighted that cost of living concerns and fiscal worries were being compounded by higher borrowing costs.
The figures also suggested a potential turning point in the labour market, with staff numbers rising for the first time since September 2024. Some surveyed companies had paused spending due to uncertainty over domestic economic policy ahead of the Budget, meaning the strong PMI reading could provide a foundation for further growth if the government's announcements prove supportive rather than restrictive.
For UK businesses and investors, stronger activity and rising new work suggest improved commercial momentum, though lingering uncertainty over the Budget and geopolitical risks mean this growth remains contingent on government policy decisions and external shocks.