UK business growth jumps to 21-month high

Growth in the UK’s private sector has increased this month at its fastest pace since April 2024 on the back of an upturn in the services sector, according to new figures.

The closely watched S&P Global flash UK composite purchasing managers’ index (PMI) reported a reading of 53.9 in January, lifting from 51.4 in December.

The flash figures are based on preliminary data.

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

The reading is significantly 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: “UK businesses kicked up a gear in January, showing encouraging resilience in the face of recent geopolitical tensions.

“Companies are reporting higher demand, both from home and export markets, which has driven output growth to the fastest since April 2024.

“Firms are also reporting the greatest optimism about the business outlook since before the 2024 autumn budget.”

The research indicated that growth in the UK’s services industry also reached a 21-month high in January.

A number of surveyed firms said they benefited from post-budget clarity, allowing for new projects to begin and investment to flow.

Manufacturing output also rose during the month, hitting its strongest level since October, and some goods firms reported improving export sales.

Total new orders were higher for the third of the past four months, pointing to a broader improvement in economic activity.

Nevertheless, firms were still downbeat on employment, reducing job numbers compared with the previous month.

Thomas Pugh, chief economist at RSM UK, said: “The sharp rise in the flash composite PMI suggests a decent post-budget bounce in activity is occurring as uncertainty dissipates.

“Signs of a rebound in growth in Q1, a now familiar pattern in the UK economy, are another reason to suspect that the MPC (Bank of England’s Monetary Policy Committee) will wait until April before cutting interest rates again.”