London, Feb 20, 2026, 13:59 GMT
- UK flash composite PMI jumped to 53.9, marking the highest level since April 2024.
- Factory output and export orders picked up speed, though growth in services eased a bit.
- Jobs dropped for the 17th month in a row, with companies blaming rising costs.
Britain’s private sector picked up speed in February, hitting its quickest growth in nearly two years, according to a flash business survey out Friday. Despite that momentum, firms kept trimming jobs.
The data points to the economy regaining some ground early in 2026 after stumbling late last year, and the focus stays fixed on whether the Bank of England might move to cut borrowing costs soon.
The numbers drop just before Chancellor Rachel Reeves’ March 3 budget update. Investors are eyeing whether stronger activity bumps up tax receipts—without stoking another round of inflation.
S&P Global’s flash composite output index edged up to 53.9 in February, compared to 53.7 in January, keeping comfortably above the 50 mark that signals expansion. Services slipped slightly, coming in at 53.9 after 54.0 the previous month. Manufacturing, however, showed more momentum: the output index climbed to 53.6, and the main factory PMI advanced to 52.0.
Chris Williamson, S&P Global’s chief business economist, said the latest February PMI figures add to the positive tone at the start of the year for the UK economy. According to Williamson, the survey data suggest GDP could climb just above 0.3% in Q1, provided the current pace doesn’t fade before March.
Jake Finney, senior economist at PwC, pointed out that the economy has managed to keep up the momentum from earlier this year, though he flagged employment as the clear weak link.
For the seventeenth month running, staffing numbers dropped, driven mostly by the services sector. Companies cited redundancies, hiring freezes, and squeezed margins. A few firms mentioned relying more on tech and productivity efforts, pushing for growth without extra hires.
Price signals remained uneasy. Input costs climbed quickly in February, though not as sharply as before. Firms pushed up selling prices at their fastest clip since April 2025, with services leading the charge.
Retail sales painted a firmer picture of demand. In January, sales volumes jumped 1.8%—the sharpest monthly rise since May 2024—buoyed by gains in artwork, antiques, and a surge from online jewellers, according to official figures.
Public sector finances kicked off the year on a strong note, with a £30.4 billion surplus posted in January—the largest monthly figure since recordkeeping began back in 1993, according to the Office for National Statistics. The ONS attributed the jump in receipts to self-assessed income and capital gains taxes. It also pointed out that changes to employer National Insurance contribution rates come into force on April 6, 2025.
Euro zone business activity picked up, though not as much as in Britain, with the flash composite PMI hitting 51.9 as manufacturing swung back into expansion. The survey pointed to Germany driving the rebound. France lagged, still sluggish.
Still, the UK survey wasn’t without red flags. Backlogs of work continued to thin out, and jobs declined once more—signs that, despite better orders, plenty of firms remain hesitant to hire and have room to spare.
