UK businesses have reported the strongest growth for eight months, according to new figures, in a positive signal ahead of the Budget.
New early figures showed that firms were boosted by the sharpest rise in new work for two years.
The closely watched S&P Global flash UK composite purchasing managers’ index (PMI) – which is based on preliminary data from the manufacturing and services sectors – recorded a reading of 53.1 for October.
It represented an improvement from a 52 reading in September and marked the fastest growth since February.
The performance was also significantly stronger than expected, with economists having forecast a rate of 51.7 for the month.
Any score above 50.0 indicates activity is growing while any score below means it is contracting.
The data highlighted growing output in both the manufacturing and services sectors.
Total new work across the private sector increased at its fastest rate since September 2024 as firms highlighted a “general recovery” in customer demand.
A number of surveyed companies indicated that AI investments and demand for technology services helped support sales.
Other companies also indicated that improving activity was partly linked to “receding” risk aversion and resilient global economic conditions.
However, there have been numerous reports that businesses faced sales headwinds linked to geopolitical uncertainty and “weak” consumer confidence.
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.
“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.”
The latest figures also pointed towards a potential improvement in the labour market, with staff numbers moving higher for the first time since September 2024.