UK private sector companies expanded output in the first few weeks of 2026 at the fastest rate since April 2024, according to S&P Global's 'flash' purchasing managers' index survey.
The UK composite PMI rose to 53.9 from 51.4 in December, well above the 51.5 reading that markets expected. A reading above 50 indicates expansion or growth in economic activity compared to the previous month.
Business optimism was the highest for 16 months. Survey respondents cited planned investment, improved sales pipelines and lower borrowing costs, while concerns remained over geopolitical uncertainties and rising business costs.
Service providers saw the strongest increase in activity in early January, with the services PMI index climbing to 54.3 from 51.4, above the 51.7 consensus forecast.
Manufacturing output rose moderately, with the sector PMI rising to 51.6 from 50.6, which economists had expected to remain.
New orders increased across the private sector, supported by a rise in export sales for the first time in four years in manufacturing. Despite stronger demand, employment declined as firms reduced costs.
Input price inflation remained high. Average prices charged by private sector firms rose at the fastest pace since August 2025.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said: “UK businesses kicked up a gear in January, showing encouraging resilience in the face of recent geopolitical tensions.
“Companies are reporting higher demand, both from home and export markets, which has driven output growth to the fastest since April 2024. Firms are also reporting the greatest optimism about the business outlook since before the 2024 Autumn Budget.”