UK PMI rises to 53.9 as export orders surge

UK private-sector output is rising, exports are improving, and firms are still cutting jobs.

S&P Global’s flash UK composite purchasing managers’ index (PMI) came in at 53.9 for February, up slightly from 53.7 in January, signalling expansion and the fastest rise in private-sector activity since April 2024, according to the Standard. The survey attributes the uptick in new work largely to services—still the dominant share of the economy—while manufacturing gained momentum via a jump in export orders.

The export detail is the headline: factory export orders posted the biggest surge since mid‑2021, the Standard reports, a post‑Covid high that suggests UK goods are finding buyers abroad even as domestic conditions remain “tough” and uncertainty elevated.

And yet employment keeps shrinking. The PMI points to job losses for the 17th consecutive month, led by a sharp reduction in services payrolls. Firms reported redundancies, hiring freezes, and technology investment that reduced the need for additional recruitment, according to the Standard.

S&P Global’s chief business economist Chris Williamson ties the contradiction together: companies are enjoying higher demand but are “focused on boosting productivity to cut costs,” extending a jobs downturn that began after the 2024 autumn Budget, the Standard writes.

When the cost of capital rises and taxes/regulation bite, management can still grow revenue—but only by squeezing unit costs. That means automation, software, process redesign, offshoring, and “doing more with less” until the labour market finally forces wages down or productivity finally forces headcount down. Politicians will call it “rebalancing.” Workers will call it being replaced.

What makes the UK case interesting is that the job cuts are concentrated in services rather than factories. Manufacturing may be regaining export traction, but the service economy—where much of the country’s employment sits—appears to be the main adjustment valve. If services firms can raise output while reducing staff, the UK’s growth story becomes less about a cyclical rebound and more about a structural shift toward capital- and software-heavy production.

Headline PMI growth is not a promise of broad-based prosperity. It’s a measure of activity, not distribution. In a world of tighter money and higher compliance costs, “expansion” can simply mean that fewer people are producing more—while the state congratulates itself for creating the conditions that made layoffs ‘necessary.’