---
source: S&P Global Market Intelligence (Reuters reporting)
url: https://wtaq.com/2026/03/04/uk-economy-expands-in-february-but-persisting-cost-pressures-pose-challenge-for-boe/
document_type: news article (reuters)
date_retrieved: 2026-03-17
period: February 2026
release_date: 2026-03-04
parent_publication: S&P Global Purchasing Managers' Index (PMI) Survey
indicators_covered: [UK Composite PMI, UK Services PMI, UK Manufacturing PMI]
actual_values: {composite: 53.7, services: 53.9}
---

# S&P Global UK Composite PMI Final — February 2026

**Release Date:** March 4, 2026  
**Period:** February 2026  
**Survey Dates:** February 10–25, 2026  
**Source:** S&P Global Market Intelligence

## Executive Summary

Britain's services sector grew robustly during February 2026, according to the S&P Global Purchasing Managers' Index survey released on March 4. The data revealed sustained private sector expansion alongside persistent job cuts and rising price pressures—a potential concern for the Bank of England ahead of its March interest rate decision.

## Key PMI Readings

### Composite PMI
- **Final:** 53.7 (February 2026)
- **Previous:** 53.7 (January 2026) — unchanged
- **Flash Estimate:** 53.9 (published February 20)
- **Interpretation:** Above 50 indicates growth in activity; readings at 53.7 signal solid expansion

The composite PMI, which combines the services survey with manufacturing sector growth, was **steady in February at 53.7**, jointly the **highest reading since August 2024**.

### Services PMI
- **Final:** 53.9 (February 2026)
- **Previous:** 54.0 (January 2026, five-month high)
- **Flash Estimate:** 53.9 (in line with preliminary reading)

Britain's services sector continued to grow, though at a slightly reduced pace compared to January. The Services Purchasing Managers' Index fell slightly to 53.9 last month from January's five-month high of 54.0, but was in line with the preliminary reading.

### Manufacturing PMI
- **Published:** March 2, 2026
- Covered in the manufacturing survey released separately on Monday

## Business Activity and Sentiment

### Growth Momentum
- Services business activity continued to recover, supported by rising domestic business and consumer spending
- The sustained recovery in business activity was maintained despite ongoing employment challenges
- Survey respondents noted a positive impact on demand from lower borrowing costs

### Employment
- **17th consecutive month of job losses** — the longest unbroken decline since 2010
- "February data pointed to a solid reduction in employment numbers, despite a sustained recovery in business activity," according to Tim Moore, economics director at S&P Global Market Intelligence
- Job losses reflected ongoing efforts to focus on boosting productivity and mitigate sharply rising input costs

## Price Pressures

### Input Costs
- Higher payroll costs were widely cited as leading to a strong pace of overall input cost inflation
- Input costs for services firms **rose at the slowest pace since November** in February
- Cost pressures included higher wages (minimum wage set to rise 4.1% to £12.71/hour in April)

### Output Prices
- Prices charged by businesses **rose at the fastest pace since August**
- The Bank of England is closely watching services price inflation as it considers the pace at which it can reduce borrowing costs
- Concerns grew that the conflict in the Middle East could fuel inflation

## Economic Context

### Policy Environment
- Finance Minister Rachel Reeves announced new economic and budget forecasts to parliament on March 3, projecting further increases in unemployment this year
- The Bank of England is expected to keep interest rates at **3.75%** in March
- Investors on March 4 (after the PMI release) slashed their bets on BoE interest rate cuts this year amid Middle East conflict concerns

### Historical Comparison
The composite PMI reading of 53.7 marks the highest level since August 2024, indicating a recovery in momentum from earlier weakness in the UK economy. However, the persistent job losses and rising input costs present challenges for monetary policymakers seeking to reduce borrowing costs.

## Source Commentary

**Tim Moore, Economics Director, S&P Global Market Intelligence:**

> "February data pointed to a solid reduction in employment numbers, despite a sustained recovery in business activity. Job losses reflected ongoing efforts to focus on boosting productivity and mitigate sharply rising input costs. Higher payroll costs were widely cited as leading to a strong pace of overall input cost inflation."

## Notes

- **Survey Sample:** Approximately 650 UK service firms surveyed for the services PMI component
- **PMI Definition:** Purchasing Managers' Index is a composite indicator tracking business activity, employment, prices, and new orders in the service sector
- **Flash vs. Final:** Flash estimates are published mid-month based on approximately 85% of responses; final readings incorporate the complete survey data
- **Next Release:** March 2026 PMI data scheduled for release on March 24–25, 2026

## Data Verification

| Indicator | February 2026 | January 2026 | Flash Estimate | Threshold |
|-----------|--------------|--------------|----------------|-----------|
| Composite PMI | 53.7 | 53.7 | 53.9 | 50.0 = no change |
| Services PMI | 53.9 | 54.0 | 53.9 | 50.0 = no change |

All readings above 50 indicate expansion. The services sector remains in growth territory, though at a moderating pace from January's five-month high.