Key facts
- British consumer confidence reached a two-year high in August, with the GfK index at -14.
- Confidence in making major purchases is at its highest since December 2021.
- The UK services sector expanded unexpectedly in August, with its PMI rising to 52.8.
- The composite PMI rose to a four-month high of 52.5.
- Economic growth is projected at approximately 0.3% for the third quarter.
British consumer morale surged to a two-year high in August, with the GfK's Consumer Confidence Index climbing to -14 from -17 in July, surpassing economists' expectations of -18. The survey indicated a significant improvement in households' willingness to make major purchases, with the relevant sub-index reaching its highest level since December 2021. Confidence in personal finances over the next 12 months also hit its highest point since January, while economic expectations reached a two-year peak.
Separately, Britain's services sector expanded unexpectedly in August, with the S&P Global Flash UK Services Purchasing Managers' Index rising to a six-month high of 52.8 from 52.1 in July, exceeding forecasts. The manufacturing sector PMI cooled to a five-month low of 51.5. The composite PMI, combining manufacturing and services, rose to a four-month high of 52.5.
These figures suggest economic growth of around 0.3% in the third quarter. Companies cited improving domestic conditions, sunny weather, and tech investment as drivers, though growth in manufacturing has softened as precautionary stock building cools. Employment in the services sector continued to decline, but at the slowest pace since last October. Optimism among services companies hit a seven-month high.