UK mid-market business activity grows at highest rate in nearly 2 years

Business activity accelerated for mid-market UK businesses in September, and small- and medium-size enterprises (SMEs) moved closer to stability, according to the latest data from NatWest.

Mid-market companies (50 to 500 employees) grew at the highest rate in nearly two years, driven by strong demand for technology services, lower employer risk aversion, and more sales opportunities, the bank’s UK Business Growth Tracker found.

NatWest’s Mid-Market Business Activity Index — which measures manufacturing and services companies — rose from 52.4 in August to 56.2 in September, its highest level since November 2024. The reading remained above the neutral 50 threshold that separates growth from contraction for the third consecutive month, signalling a strong rebound in business activity.

NatWest compiled the report using data from S&P Global UK Purchasing Managers’ Index surveys of nearly 1,100 UK companies, including about 230 mid-market businesses and about 850 SMEs (1 to 249 employees).

Optimism among mid-market companies continued to improve in both manufacturing and service industries. That optimism contributed to a moderate increase in hiring, particularly in the private sector.

However, economic uncertainty remains a challenge for employers, as inflation rose sharply in September after cooling in August, the report said.

SME business activity came close to stabilising in September, the report found. Business activity and new orders declined marginally, while hiring declined at the lowest rate since February. The seasonally adjusted SME Business Activity Index rose from 47.8 in August to 49.8 in September, just below the neutral level.

While job losses eased among SMEs, business confidence fell slightly as rising costs, geopolitical uncertainty, and domestic economic conditions dampened the outlook of some employers.

Trade expectations were mixed. Around 34% of panellists expect an increase in export work over the next 12 months, while 13% expect a decline.

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