UK business activity hits highest level since January 2025 in August
Oct 06, 2026
UK business activity reached its highest level since January 2025 in August, with the Output Index rising to 98.37 as resilient services activity supported growth despite geopolitical and inflationary pressures, according to the latest Business Trends report from BDO, a consulting and business advisory firm.
For apparel, textile and retail supply-chain teams tracking UK demand conditions, the report pointed to services-led resilience alongside softer manufacturing output and continued pressure from weak export demand.
Accountancy and advisory firm BDO LLP said business optimism improved markedly in August to 94.22, the highest figure since just before the 2024 Autumn Budget, which was Labour's first since it returned to Government. The Services Optimism Index rose to 94.48 from 89.72 in July, as industries responded positively to the Government's business-friendly messaging ahead of the Autumn Budget.
The Manufacturing Output Index also stayed in expansionary territory at 95.58. It edged lower as the temporary boost from precautionary stockpiling continued to fade and export demand softened.
The BDO Employment Index, which combines hiring intentions, headcount and labour demand, was broadly unchanged at 93.10, hovering just above its recent 15-year low. While hiring remained subdued. The slowing pace of job losses pointed to a labour market stabilising rather than deteriorating further as shared by BDO LLP.
The Inflation Index rose to 102.18 from 101.45 in July, as the cost of doing business came under renewed pressure following re-emerging tensions in the Middle East. Both input costs and consumer price pressures were continuing to rise, with higher oil prices and the increase in the Ofgem price cap feeding through to business and household bills.
Scott Knight, head of growth at BDO said, "With output on the up, it is no wonder businesses are starting to feel a little less gloomy. However, all eyes are on Burnham and the Autumn Budget. Practical measures to reduce costs and unlock investment are essential if the Government is to turn sentiment into meaningful growth."
