UK private sector activity sparks in December - PMI

16th Dec 2025 08:37

(Sharecast News) - The UK economy regained momentum in December, a closely-watched survey showed on Tuesday, boosted by a rebound in manufacturing.

The latest flash UK PMI composite output index from S&P Global came in at 52.1, up from November's 51.2 and ahead of consensus for 51.6. A reading above the neutral 50.0 benchmark suggests growth, while one below it indicates contraction.

The composite is a weighted index of the manufacturing and services PMI, both of which performed better than expected.

The manufacturing output index sparked 1.5 points to 51.8 in December, a 15-month high, while the manufacturing PMI was one point stronger at 51.2, comfortably ahead of forecasts for 50.4.

The UK services PMI business activity index, meanwhile, came in at 52.1, up from 51.3. Overall, the rise in new business was the strongest for 14 months.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said: "It's a big relief that business confidence has not slumped in a repeat of last year's post-Budget gloom.

"Instead, companies have ended the year on a slightly more optimistic note amid signs of improving demand, now that some of the uncertainty created by the Budget has cleared."

However, he cautioned: "The overall pace of output and demand growth remains lacklustre, and the expansion is still very dependent on technology and financial services actively, with many other parts of the economy struggling to grow or in decline.

"Job losses are also again worryingly widespread, and it remains to be seen whether the uptick in orders during December will persuade more companies to start hiring again."

Official labour data, also released on Tuesday, showed unemployment had ticked up to 5.1% in the three months to October, while wage growth slowed.

Matt Swannell, chief economic advisor to the EY Item Club, said: "The underlying momentum in the private sector remains soft, and this trend is likely to continue through 2026.

"Respondents reported that higher labour costs pushed up input cost inflation, and businesses reflected this in output prices. Nevertheless, a 25 basis point rate at the Monetary Policy Committee meeting later this week is a likely prospect.

"However, the combination of soft activity growth and relatively sticky inflation next year will continue to divided the MPC and result in a cautious pace of rate cuts."

The composite PMI is based on surveys sent to panels of around 650 manufacturers and 650 service providers. Data were collected between 4 and 12 December.