The UK Services PMI Business Activity Index came in at 53.9 in February, only slightly below January’s 54.0. Any reading above 50 signals growth, and February marked another solid month of expansion for the services sector. Activity has now remained in growth territory since May 2025. Firms said improving client confidence and the release of previously delayed projects helped support demand. However, some businesses noted ongoing difficulties in sectors such as leisure, hospitality and construction.

New business increased for the third month running, mainly driven by domestic demand. Overseas sales were broadly flat, with weaker conditions in Europe partly offset by gains in the US and some emerging markets. Backlogs of work were stable, ending a long period of decline. Some firms reported less spare capacity due to rising orders, while others said productivity gains and investment in technology allowed them to expand output without hiring more staff.

Employment fell for the seventeenth consecutive month, although the pace of job cuts slowed compared with January. Many companies cited hiring freezes and decisions not to replace departing staff, largely due to higher operating costs. Input prices continued to rise, particularly because of increased wages and more expensive supplies such as food and technology components. Although cost inflation eased to a four-month low, businesses still raised their selling prices at a strong pace.

The UK Composite PMI Output Index, which covers both manufacturing and services, registered 53.7 in February, matching January’s 17-month high and marking ten straight months of overall private sector growth. Manufacturing output improved, helping offset slightly slower services growth, but employment across the private sector remained under pressure.