The S&P Global flash UK composite purchasing managers' index (PMI) rose to 53.1 in October, marking the fastest pace of business activity growth in eight months and providing an encouraging signal ahead of the forthcoming Budget.
The preliminary reading, derived from early data across the manufacturing and services sectors, represents a notable improvement on September's figure of 52 and came in considerably stronger than analysts had expected, with economists having predicted a reading of 51.7.
Any score above 50.0 signals that activity is expanding, while anything below that threshold indicates contraction.
Sharpest rise in new orders in two years
The data pointed to rising output across both the manufacturing and services sectors. Total new work throughout the private sector grew at its quickest pace since September 2024, with firms citing a "general recovery" in customer demand.
Several surveyed businesses noted that investment in AI and robust appetite for technology services had helped underpin sales figures. Other firms suggested that the upturn in activity was partly attributable to "receding" risk aversion and resilient global economic conditions.
Nevertheless, a number of businesses reported that sales faced headwinds stemming from geopolitical uncertainty and "weak" consumer confidence.
Jobs market shows signs of upturn
The most recent data also indicated a potential upturn in the jobs market, with staff headcounts rising for the first time since September 2024.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said: "There are reports of paused spending due to a lack of clarity on domestic economic policy in the run up to the Budget, meaning the promising economic picture from the latest PMIs should provide an encouraging base for further robust economic growth through the winter months, barring any adverse surprises to businesses in the tax and spending review."
Williamson added: "Geopolitics, and notably the potential for conflicts in the Middle East and Ukraine to add to energy market volatility, are, however, clearly still unsettling many businesses, and cost of living concerns and broader fiscal worries are being compounded by the shift to higher borrowing costs."
