UK private sector activity expanded at its fastest pace in 21 months this January, with the S&P Global Flash UK PMI Composite Output Index rising to 53.9. Growth was led by services, which saw the strongest expansion in nearly two years, while manufacturing also posted gains for a fourth straight month.

The upswing follows post-Budget clarity, which survey respondents said released new projects and client investment. New orders rose sharply, and export sales improved markedly, driven by the first increase in manufacturing export orders in four years. Demand from Europe, the US, and China was specifically cited by manufacturers.

Despite the activity boost, firms continued to cut jobs at an accelerating pace, citing higher payroll costs and subdued conditions. Input cost inflation held near a seven-month peak, prompting businesses to raise prices at the fastest rate since August 2025. S&P Global's Chris Williamson now estimates quarterly GDP growth approaching 0.4%.