Mixed PMI signals for economies

What's happened

August PMI surveys have shown Britain’s services and manufacturing sectors have expanded while construction has contracted sharply; business confidence indicators in China, Saudi Arabia and the UK point to resilience despite higher energy costs and Middle East tensions. Supply costs, diesel shortages and foreign-exchange limits have pressured firms in Mozambique and elsewhere in Q2 2026.

What's behind the headline?

What the data says

• UK services PMI has risen to the mid-52s, showing month-on-month improvement and stronger operating conditions. Manufacturing has remained slightly above 50 (around 51.7), recording modest expansion and employment growth. Construction has recorded a deep and persistent contraction (44.3), led by a sharp drop in housebuilding.

• Business-confidence measures in China, Saudi Arabia and the UK have shown pockets of resilience: China’s official manufacturing PMI was just under 50 at 49.8; Saudi Arabia’s Business Confidence Index has stayed above 50 and strengthened through July; Lloyds’ business confidence rose to +53% in August.

What’s behind the split

• Energy-price volatility and the US–Iran war have increased input costs and uncertainty. Firms are passing some costs into prices more selectively, and tighter client demand is hitting construction and smaller manufacturers harder.

• Supply constraints and currency access problems are reducing production in countries like Mozambique, where CTA leaders have said diesel price jumps and FX shortages have cut capacity and delayed imports of inputs.

Consequences and near-term outlook

• The services-led growth profile will sustain headline activity but will not restore investment-led expansion: business investment is set to remain weak while consumption supports growth.

• Construction will continue to depress local labour markets and housing delivery in the near term; housebuilding will keep falling until mortgage costs and demand recover.

• Elevated energy and shipping costs will keep inflationary pressure localised in production-heavy sectors, slowing re-stocking and capital spending. Overall, the data suggests growth will be uneven across sectors and countries over the coming quarters.

How we got here

PMI and business-confidence surveys summarise firms’ recent activity and expectations. In August S&P Global reported UK services and manufacturing above 50 while construction stayed below 50. Other surveys from Lloyds, GASTAT and national statistics bodies have signalled resilient non-oil activity and mixed regional effects from the Iran–US conflict and oil-price shocks.

Our analysis

Reuters and S&P Global reporting show Britain’s services PMI rose to 52.5 while manufacturing stood at 51.7 and construction fell to 44.3. Tim Moore of S&P Global told Reuters that services firms reported "improving operating conditions" and construction suffered from "subdued demand and low client confidence" (Reuters). The Independent echoed S&P Global’s construction figures and quoted Tim Moore and Thomas Pugh on the 20th consecutive sub-50 reading. Reuters coverage of the manufacturing PMI noted employment expanded at the fastest pace in two years and that the survey covered firms between Aug 12–25. Lloyds and Ipsos data reported by Reuters showed business confidence climbed to +53% in August, with Amanda Murphy saying firms are reporting "stronger customer demand". In China, National Bureau of Statistics figures reported the official manufacturing PMI at 49.8, which Bloomberg and CNBC published alongside commentary on weakening domestic demand and property-sector strain. Saudi GASTAT data, reported by Arab News, showed the Business Confidence Index holding above 50 and rising to the mid-50s by July; Hamza Dweik of Saxo Bank said confidence is supported by "public and private sector momentum." Mozambique’s CTA chairperson Álvaro Massingue, quoted by All Africa, has said diesel price rises of around 46% and foreign-exchange access limits have "direct impact on economic activities, supply chains, and the operational capacity of companies."

Go deeper

• How long will UK construction remain below growth?
• Will higher energy costs force more firms to raise prices?
• Could Mozambique’s fuel and FX shortages prompt policy fixes?

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• United Kingdom - Country in Europe

  The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom or Britain, is a sovereign country located off the north­western coast of the European mainland.

• Reuters - News organization company

  Reuters is an international news organization owned by Thomson Reuters. It employs some 2,500 journalists and 600 photojournalists in about 200 locations worldwide. The agency was established in London in 1851 by the German-born Paul Reuter.

• Middle East - Region

  The Middle East is a transcontinental region that generally includes Western Asia, all of Egypt, Iran, and Turkey. Soviet Central Asia, Afghanistan, and Pakistan are generally excluded.

• National Bureau of Statistics of China - Agency

  The National Bureau of Statistics, abbreviated as NBS, is an deputy-cabinet level agency directly under the State Council of the People's Republic of China.

• People's Republic of China - Country in East Asia

  China, officially the People's Republic of China, is a country in East Asia. It is the world's most populous country, with a population of around 1.4 billion in 2019.

• Iran (Islamic Republic of Iran) - Country in the Middle East

  Iran, also called Persia, and officially the Islamic Republic of Iran, is a country in Western Asia. It is bordered to the northwest by Armenia and Azerbaijan, to the north by the Caspian Sea, to the northeast by Turkmenistan, to the east by Afghanistan a

• CNBC - Television channel

  CNBC is an American pay television business news channel that is owned by NBCUniversal Worldwide News Group, a division of NBCUniversal, with both being ultimately owned by Comcast.