LONDON (Reuters) -British businesses might be at a turning point with the manufacturing sector showing signs of a recovery and inflation pressures receding, but caution is still weighing on firms ahead of next month’s government budget, a survey showed on Friday.
The preliminary UK Composite Purchasing Managers’ Index published by S&P Global, covering the services and manufacturing sectors, sped up slightly to 51.1 this month from September’s 50.1 which was barely above the 50 threshold for growth.
“October’s flash UK PMI survey brings hope that September was a low point for the economy from which business conditions are starting to improve,” Chris Williamson, chief business economist at S&P Global Market Intelligence, said.
Economists polled by Reuters had mostly forecast a weaker pickup to 50.6.
Business confidence and new orders were both at their second-highest levels in a year – even if they remained weak by historical standards – and job losses were the smallest since May, the survey showed.
The gradual resumption of production at carmaker JLR – which was halted by a cyber-attack – was helping some manufacturers.
But October’s survey findings were consistent with only a 0.1% pace of quarterly growth, Williamson said.
“Companies are clearly treading cautiously in terms of spending, investment and hiring ahead of the upcoming budget, the outcome of which has the potential to once again sway the business mood in the months ahead,” he said.
Finance minister Rachel Reeves is widely expected to raise taxes in her budget on November 26, having increased social security contributions for employers in her first budget last year.
S&P said the preliminary PMI reading for the services sector hit a two-month high of 51.1 in October, up from 50.8 in September.
The smaller manufacturing PMI showed a stronger improvement to a 12-month high of 49.6 from 46.2 despite a fall in exports due in part to U.S. President Donald Trump’s trade tariffs.
In news likely to be welcomed by the Bank of England as it gauges when it can resume cutting interest rates, prices paid by firms across services and manufacturing – while still increasing quickly – rose by the least since November 2024.
Businesses increased the prices they charge at the slowest pace since June.
(Writing by William Schomberg; Editing by Toby Chopra)
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