Finance
UK businesses report another strong month, PMI survey shows
Published by Global Banking & Finance Review®
Posted on February 20, 2026
3 min readLast updated: February 20, 2026
Quick Summary
UK Composite PMI rose to 53.9 in February, the highest since April 2024, signaling a firmer rebound. Manufacturing hit 52.0 and services stayed at 53.9, but staffing fell as higher employer NI bites, boosting calls for BoE rate cuts.
UK Firms Chalk Up Another Solid Month as PMI Signals Ongoing Growth
LONDON, Feb 20 (Reuters) - British businesses have extended their early 2026 rebound into a second month, but jobs are still being sharply cut among services firms partly as a result of higher taxes imposed on them by the Labour government, a survey showed on Friday.
UK PMI Points to Sustained Expansion in Early 2026
The S&P Global UK Composite Purchasing Managers' Index rose to 53.9 in a preliminary report for February from 53.7 in January, the highest level since April 2024, before Prime Minister Keir Starmer's government took office.
"The early PMI data for February bring further signs of an encouraging start to the year for the UK economy," said Chris Williamson, S&P Global chief business economist.
PMI readings above 50.0 indicate growth in activity, while those below that level point to a contraction.
Economic Context and GDP Momentum
The surveys for January and February - which echoed other signs of a pickup among businesses and consumers after uncertainty in the run-up to finance minister Rachel Reeves' budget in late November - were consistent with economic growth of about 0.3% in the first quarter of 2026, Williamson said.
That would be stronger than an expansion of just 0.1% in the last quarter of 2025.
BoE Policy Expectations and Inflation Signals
"Bank of England policymakers will be encouraged by the indications of stronger economic growth," Williamson said. "But the relatively modest price pressures being signalled and ongoing worrying labour market weakness will likely result in a growing call for further rate cuts."
Investors are largely expecting the BoE to resume its cuts to borrowing costs in March as the central bank takes comfort from signs of slowing inflation and shifts its focus towards weakness in the jobs market.
Prices Charged and Input Cost Trends
Prices charged by businesses rose at the fastest pace since last April but their cost burdens, while still high, increased at the slowest pace in three months.
Employment Pressures and Tax Changes in Services
Staffing levels fell particularly sharply among services firms with some companies reporting redundancies or hiring freezes as employers faced higher social security payments which were introduced by Reeves in April 2025.
Technology Adoption to Offset Hiring
Some firms said they were investing in technology to grow without additional recruitment.
Sector Breakdown: Services vs Manufacturing
The PMI for the services sector edged down to 53.9 from 54.0 in January, while the survey for the smaller manufacturing sector hit an 18-month high of 52.0, up from 51.8.
New Orders and Export Demand
Total new work increased at the strongest pace since September 2024 with the rise in new work for manufacturers from abroad at its fastest pace in four-and-a-half years.
(Writing by William Schomberg; Editing by Joe Bavier)
Key Takeaways
- •UK Composite PMI rose to 53.9 in February from 53.7 in January, the highest since April 2024.
- •Services PMI held at 53.9 while manufacturing climbed to 52.0, an 18‑month high.
- •Output charges increased at the fastest pace since last April, but input cost inflation eased.
- •Services employment fell sharply amid higher employer National Insurance introduced in April 2025; some firms are investing in tech to boost output.
- •PMI signals roughly 0.3% GDP growth in Q1 2026; investors expect the Bank of England to resume rate cuts in March.
Frequently Asked Questions about UK businesses report another strong month, PMI survey shows
1What is the main topic?
The article covers the February 2026 S&P Global UK Composite PMI rising to 53.9, indicating continued growth in private‑sector activity alongside weak hiring, especially in services.
2What does a PMI reading above 50 mean?
A PMI above 50 signals expansion in business activity. February’s 53.9 reading points to a solid rebound in output across services and manufacturing.
3How could this affect Bank of England policy?
Stronger growth with easing cost pressures but soft employment may strengthen market expectations for rate cuts, potentially as soon as March 2026.
