UK services sector returns to growth, optimism picks up, PMI shows

LONDON, Aug 5 (Reuters) - Britain's dominant services sector returned to growth last month as new orders picked up, according to a survey by S&P Global that showed expectations for activity in the next 12 months were the highest since before the start of the Iran war in February.   

The S&P Global UK Services Purchasing Managers' Index (PMI), published on Wednesday, rose to 52.1 in July from 48.8 in June, its first growth since April and above an earlier provisional or flash reading of 51.8. 

The upward revision also lifted the composite PMI, which includes the smaller manufacturing industry, to 52.2 from 49.3, taking it above the 50 mark which divides growth from contraction for the first time since April.

• S&P Global said the index of total new work among services firms rose to 50.8 in July from 47.6, the strongest since February, ending a four-month period of decline since the Iran war started

• New export orders in the sector decreased for the fifth month in a row but at the mildest pace of that run

• Services firms reported the weakest increase in input costs since February as a ceasefire in the Iran war pushed down oil and gas prices

• Prices charged rose at the slowest rate in five months

• The survey's employment gauge dropped for the 22nd consecutive month, equalling a run seen during the global financial crisis almost two decades ago although it was the softest pace of decline since October 2025

• Business confidence was the highest since February

• "Stronger growth projections for the year ahead partly reflected hopes of de-escalating Middle East tensions and recent signs of easing inflationary pressures," said Tim Moore, economics director at S&P Global Market Intelligence.

(Reporting by Suban AbdullaEditing by William Schomberg)