British businesses recorded their strongest month of activity since February, according to the latest S&P Global flash purchasing managers' index (PMI), published on 23 October. The composite index, which combines manufacturing and services, rose to 53.1 in October from 52.0 in September, beating economists' forecasts and marking an eight-month high. Any reading above 50 signals expansion.

The upturn was driven by the sharpest rise in new work since September 2024, with firms reporting a general recovery in customer demand in both domestic and export markets. Some businesses cited a sales boost from AI investment spending and rising demand for technology services, while others pointed to receding risk aversion and resilient global conditions.

Jobs return but costs climb

Employment returned to growth, albeit only marginally, ending a two-year period of job cuts, S&P Global said. Manufacturers recorded their strongest increase in output in more than two years, while services firms reported an acceleration in new orders. The services PMI rose to 53.1 from 52.1, and manufacturing climbed to 52.8 from 51.9.

The survey also flagged persistent price pressures. Input cost inflation accelerated to its strongest since June, driven mainly by higher energy, raw material and transport costs in manufacturing, although prices charged by firms rose slightly more slowly than in September. S&P Global's chief business economist, Chris Williamson, said some firms were holding off spending ahead of Wednesday's Budget, which could mean further growth if the Chancellor avoids measures that hurt business.