UK economy gathers pace but cost pressures intensify, PMI shows

LONDON, Sept 3 (Reuters) - Activity ‌in Britain's ​dominant services ​sector grew for the second month in a row in August and confidence rose, according to a ‌survey on Thursday that also showed more firms reporting rising ⁠prices, a potential concern for the Bank of England.

The final reading of ‌the S&P Global UK Services ‌Purchasing Managers' Index (PMI) rose to 52.5 in August from 52.1 in July, its strongest growth since April. Thursday's reading was slightly ​below a provisional reading of 52.8 but added to signs of resilience in the economy despite the U.S.-Iran war.

"August data highlighted ⁠improving operating conditions across the UK service economy. Business and consumer spending saw further ​gains after declining during the second quarter of 2026," said Tim Moore, economics director at S&P Global Market ​Intelligence.

• S&P Global said more firms ‌reported increasing the prices they charge as well as higher input prices after a slowdown in both ⁠measures in July

• The BoE is keeping a close eye on firms' pricing plans as it tries to gauge how much of the surge ⁠in energy prices caused by the Middle East conflict will be passed on ​and push up inflation

• Optimism among services firms rose to the highest since February despite concerns about the Iran war and inflation

• The survey's ‌index of new work eased slightly to 50.7 in August from July's 50.8

• Employment decreased at the ‌slowest pace since October 2025, helped by improved sales pipelines and ⁠broader market conditions

• The composite ‌PMI, which includes the ​smaller manufacturing sector, rose to 52.5 from 52.2, the highest since April.

(Reporting by Suban Abdulla; Editing by ‌William Schomberg)

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