UK business activity and confidence rise in August

UK business activity and confidence showed signs of improvement in August. According to BDO, the Output Index reached 98.37, its highest level since January 2025, driven largely by resilient services activity in sectors such as travel and leisure.

Business optimism also rose significantly, reaching 94.22. This increase in confidence is attributed to positive government messaging ahead of the upcoming Autumn Budget. However, the manufacturing sector saw a slight decline in output as export demand softened and precautionary stockpiling faded.

Data from the NatWest Growth Tracker corroborates regional growth, noting that business activity increased in seven of the 12 UK nations and regions. Northern Ireland led the expansion with a reading of 55.5, followed closely by London at 54.9. Conversely, some areas such as Scotland and the North East recorded slight decreases in activity.

Despite the growth, inflationary pressures are resurfacing. Both BDO and NatWest reported rising input costs, influenced by geopolitical tensions in the Middle East and increased fuel prices. While the labor market appears to be stabilizing, hiring remains subdued.