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Business — Graeme Wearden
UK service sector growth hits four-month high
Just in: The UK services sector has recorded its fastest upturn in output since April.
Data provider S&P Global has reported that firms experienced a “moderate” increase in business activity last month, partly thanks to a rise in new work.
This helped to lifted the Services PMI up to 52.5 in August, up from 52.1 in July, showing faster growth.
However, firms also reported a rise in input cost inflation – Around 31% of firms surveyed said their input prices had risen during August, while less than 1% noted a decline.
This was blamed on higher fuel and transportation bills, alongside rising wages, food prices and technology costs.
Tim Moore , economics director at S&P Global Market Intelligence , explains:
“August data highlighted improving operating conditions across the UK service economy. Business and consumer spending saw further gains after declining during the second quarter of 2026, which led to the fastest expansion of output levels since April.
Service providers are increasingly optimistic about the year ahead business outlook, with confidence levels now close to those seen just prior to the Middle East conflict. However, business activity growth projections were still subdued in comparison to long-run trends amid lingering worries about inflationary pressures and geopolitical tensions.
Higher fuel prices and transportation bills reignited overall input cost inflation in August. Moreover, the rate of output charge inflation in the service sector also accelerated for the first time in four months as businesses sought to protect their margins from suppliers’ price hikes.
UK mortgage rates have not - yet - been pushed up by the bond market crisis, new data shows.
The average 2-year fixed residential mortgage rate today is 5.59%. This is unchanged from the previous working day.
The average 5-year fixed residential mortgage rate today is 5.63%. This is unchanged from the previous working day.
Swiss inflation rate doubles as fuel prices surge
Inflation in Switzerland (not the cheapest place anyway) has doubled, driven up by higher enegy prices.
Swiss consumer prices in August were 0.8% higher than a year ago, figures from the Federal Statistical Office showed, up from the 0.4% rate in July.
The jump was driven by 25% increase in petroleum prices, along with pricier housing rentals, in-patient hospital services, and heating oil.
The drop in the oil price yesterday, and this morning, has helped cool the “global bond rout”, reports Neil Wilson of Saxo Markets .
Comments from the US administration helped ease concerns in bond markets about the energy complex as Energy Sec Wright said 17mn barrels of oil had transited the Strait of Hormuz on Monday, which if true would be the highest level passing the waterway on a single day since the war started.
Even if the Strait is not open fully such a high figure also doesn’t suggest Iran is in control of it.
The London stock market has opened calmly (apart from Crest Nicholson’s shares!).
The FTSE 100 index of blue-chip equities is down a mere 3 points, or 0.03%, at 10,752.
Housebuilders are among the fallers, following Crest’s (lack of) profits warning, with Barratt and Persimmon both down 1.4%.
UK housebuilder Crest Nicholson predicts loss amid 'subdued' conditions
UK housebuilder Crest Nicholson has startled investors with a profits warning this morning, sending its shares sliding by over 12%.
Crest now expects to make a loss this financial year, and to build fewer homes than previously forecast.
Market conditions have been more subdued than expected through the seasonally quieter summer trading period, with affordability constraints and competitive pricing continuing to weigh on open market sales rates.
As a result, Crest now expects to only complete 1,300 to 1,400 homes this year, down from previous guidance of 1,400 to 1,500.
It now expects to make a loss of around £10m on an EBIT basis (before interest and tax), down from a previous target of a profit of £5m to £10m.
Anthony Codling of RBC Capital Markets says:
Challenging market conditions will see Crest Nicholson sell 50-100 fewer homes this year than it had previously guided, small numbers which will have a big impact on financial performance, turning small profit into a small loss.
Not what the Group will have wanted as it is currently renegotiating its banking covenants, however year-end net debt is expected to be c.£30m better than previously expected due to fire remediation recoveries and land sale revenues demonstrating that Crest is taking a proactive approach to challenging market conditions.
The UK government bond market is open! And there is reassuring news for borrowers, and our political leaders.
UK bond prices are strengthening, a little, which is pushing down the yield (or rate of return) on these gilts.
10-year UK bond yields have dropped by over 4 basis points (0.04 of a percentage point) to 5.195%, away from the 18-year high set yesterday.
30-year bond yields are down 4bps too, to 5.831%.
Update: AJ Bell investment director Russ Mould reports there is “a measure of calm in government bond markets” today, as the oil price drops.
With Brent crude down about 0.5% at $95.20 a barrel, some of the fears of an inflationary shock that would drive interest rates higher may be easing.
The oil price is dropping this morning, which should help ease the bond market wobble.
Brent crude has dropped by 1.1% to $94.57 a barrel, having traded as high as $97/barrel on Wednesday.
Introduction: Mortgage rates set to rise as swaps hit three-year high
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Mortgage borrowers are being warned that borrowing rates are set to rise, as this week’s global bond sell-off ripples through the economy.
Although the turmoil in the bond markets has cooled – for now, at least – the consequences of the jump in bond yields could be serious for borrowers.
That’s because UK swap rates – the interest rates that banks charge when they borrow from each other – have been pushed up by the rise in gilt yields.
The five-year swaps rate yesterday rose above 4.52%, their highest level since October 2023. We’d expect that to result in higher interest rates on fixed-term mortgages.
AJ Bell investment director Russ Mould explains:
Credit card, mortgage and auto loan interest rates will rise if bond yields rise, as the lenders seek to preserve loan book margins and manage their risk.
Such moves would undermine Andy Burnham’s push to ease cost of living pressures.
Yesterday, the yield on UK 10-year government debt hit its highest level since 2008, before retreating to less painful levels thanks to a drop in the oil price.
Oil has been one of the key factors driving the bond market sell-off, as inflationary pressures from high prices could force central banks to raise interest rates.
Tom Simpson , managing director of homes at Yorkshire Building Society , points out that swaps rates were more volatile in March, at the start of the Iran war.
All things being equal, you would expect a modest increase in mortgage rates based on what we’ve seen so far.
Simpson emphasised that the moves in the swaps market are more modest than six months ago:
“A 0.1 [percentage point] increase, which is what we’ve seen over the last week, is much less of an increase than when we saw a 0.5 [percentage point] increase in 10 days in March when the Iran war broke out.”
9am BST: Eurozone services PMI report for August
9.30am BST: UK services PMI report for August
9.30am: ONS Business insights and impact on the UK economy
10.30am: Challenger survey of US Job Cuts
3pm BST: US services PMI report for August
Just in: The UK services sector has recorded its fastest upturn in output since April.
This report is published with credit to theguardian.com. Full available text from the wire is above. Read on theguardian.com →
Source: theguardian.com · Graeme Wearden. Published 3 Sept 2026, 08:45 am.
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