Key findings:
- Sharpest rise in UK mid-market business activity for 22 months
- Growth driven by robust upturn across the service economy
- Mid-market manufacturers signal modest rise in output
- SMEs record a near-stabilisation of business activity in September
- Positive sentiment signalled for the year ahead, despite challenges from elevated inflation
NatWest's Tracker – which is based on the Purchasing Managers' Index™ and surveys mid-market businesses operating in the manufacturing and services sectors – registered 56.2 in September, up from 52.4 in August and the highest since November 2024. The latest reading was above the 50.0 no-change mark for the third month running and signalled a strong rebound in business activity levels at mid-market enterprises.
September data indicated a particularly sharp increase in business activity at mid-market service providers (index at 57.0), with the rate of growth the strongest for over a year-and-a-half. Mid-market manufacturers recorded a moderate upturn in production volumes in September (index at 52.2). The pace of expansion picked up since August but remained softer than the four-year high seen in June.
Survey respondents commented on strong demand for technology services, receding risk aversion among clients and a general improvement in sales opportunities. However, businesses are having to contend with renewed cost pressures and there were still many reports that geopolitical tensions, sluggish economic conditions and squeezed consumer budgets had constrained demand.
September data indicated a moderate increase in employment at mid-market firms, with the rate of job creation the strongest for 22 months, which mid-market companies attributed to a rebound in business requirements, new project starts and long-term efforts to boost capacity.
The uptick in employment data comes as NatWest continues to support mid-market businesses to realise their full potential as growth engines of the UK economy. NatWest’s recent report on The Middle Speaks: Narrowing the mid-market conversion gap, through technology, talent and trade, found that mid-market firms represent one of the UK economy’s greatest growth opportunities, contributing around £1.2 trillion in turnover and employing 7.3 million people across the UK.
SME business conditions close to stabilisation
Latest PMI data indicated that business conditions faced by small and medium-sized enterprises (SMEs) were close to stabilisation in September. Business activity and new orders both fell only marginally, while employment declined at the weakest pace since February.
At 49.8 in September, the NatWest tracker rose from 47.8 in August and was just fractionally below the neutral 50.0 threshold that separates growth from contraction. Furthermore, the reduction in business activity was the softest recorded since the current period of decline began in November 2025.
Steady improvement in business optimism
Mid-market business activity expectations for the year ahead strengthened in September and were the second highest since March. Moreover, the degree of confidence remained above the three and a half year low seen in May. Positive sentiment was recorded in both the manufacturing and service sectors.
Easing geopolitical tensions and a gradual turnaround in domestic economic conditions were cited as factors that could boost business activity in the next 12 months. Greater productivity, alongside planned investments in new products and technologies were also reported as reasons for optimism.
This aligns with NatWest’s The Middle Speaks report, which found that technology presents the greatest long-term opportunity for productivity growth, while highlighting the need to help firms move from initial AI adoption to strategic deployment at scale.
The report also identified that over half (55%) of mid-market firms identify talent and leadership development as a top barrier to growth. Meanwhile 42% say recruitment and workforce capability are the economic challenge most likely to constrain expansion.
SMEs continued to express optimism towards the 12-month outlook for business activity during September, with the respective index posting comfortably above the neutral 50.0 level at 60.9. That said, the overall degree of positive sentiment slipped to the weakest since June, driven by softer expectations across both manufacturers and service providers.
Positive outlook for UK exporters
The latest survey pointed to sustained optimism regarding future foreign demand for UK goods and services. Approximately 34% of panellists anticipate an increase in new export work over the next 12 months, while only 13% expect a decline.
AI is emerging as an area of potential export growth for UK businesses, with 7% citing AI and data-centre demand as an opportunity for overseas sales over the coming year. Businesses pointed in particular to higher spending on AI infrastructure, including data centres, while new AI and digital products and services were also expected to support export sales.
Optimism was stronger among manufacturers than service providers when assessing their export prospects in September. Two in five (40%) goods producers forecast an improvement in overseas sales, compared to 14% that project a deterioration.
Services companies were also generally confident that export sales will rise over the year ahead, with just over one in four (26%) firms anticipating an increase, while only 12% expect a decline.
NatWest’s The Middle Speaks report found that many mid-market firms have established international relationships with ambitious plans to grow. However, they often lack dedicated customs, legal, and compliance teams, as well as geopolitical expertise and supply chain flexibility.
Sebastian Burnside, NatWest’s Chief Economist, said: “September’s business activity scores are further evidence of stronger growth for UK business in Q3, as the economy has beaten expectations for much of this year. Mid-market output rose at its fastest pace for almost two years, with the headline index climbing to 56.2, led by a particularly robust recovery in services. Manufacturing also expanded, while the SME index improved sharply to 49.8 – just below the threshold separating growth from contraction.
“Stronger new orders and renewed job creation suggest mid-market firms are investing for growth, however, rising fuel and wage costs – alongside geopolitical uncertainty and pressure on household budgets – mean that sustaining this recovery will depend on businesses continuing to adapt rapidly to a changing environment.”
Andy Gray, Managing Director of Commercial Mid-Market at NatWest said: “There is a growing sense that the UK’s mid-market is gaining momentum. As the UK's leading bank for the mid-market, we hear from our customers that businesses are seeing opportunities emerge, committing to new projects and looking again at how they can invest for future growth.
“Mid-market businesses are the engines of regional growth. They create jobs, invest locally and strengthen the economic ecosystems around them. While the wider environment remains complex, with cost pressures and geopolitical uncertainty continuing to shape decision-making, what is encouraging is that businesses are looking beyond those immediate challenges, with investment in productivity, technology and new products helping them position for the opportunities ahead.”
NatWest Media Contacts:
Michelle Slade, Media Relations Lead on 07483336678 or michelle.slade@natwest.com
Siobhan Molloy, Media Relations Manager on 07483758964 or siobhan.molloy@natwest.com
Notes to editors
Sharp rise in new orders at mid-market firms
A strong rise in business activity at mid-market companies in September was driven by the fastest rate of new order growth since November 2024. Higher levels of new work were reported in both the manufacturing and service sectors, with the latter reporting the steeper rate of expansion.
Survey respondents commented on strong demand for technology services, receding risk aversion among clients and a general improvement in sales opportunities. However, there were still many reports that elevated geopolitical tensions, sluggish economic conditions and squeezed consumer budgets had constrained demand.
SMEs indicated that demand conditions deteriorated at a softer and only marginal rate in September. Moreover, the latest drop in new business was the least pronounced since the current sequence of contraction began nearly two years ago.
Mid-market staffing levels increase for first time since March
September data indicated a moderate increase in employment at mid-market firms. The rate of job creation was the strongest for 22 months, which mid-market companies attributed to a rebound in business requirements, new project starts and long-term efforts to boost capacity.
Staffing levels at UK SMEs continued to fall at the end of the third quarter, thereby stretching the current period of job shedding to two years. That said, the pace of reduction was the softest recorded since February and only modest. Trends diverged at the sector level, with a mild decline in service sector payrolls contrasting with a fresh uptick in manufacturing headcounts.
Input cost inflation picks up amid higher fuel prices
UK businesses recorded a steep increase in their average cost burdens during September, with the rate of inflation accelerating in both the mid-market and SME segments.
A renewed acceleration in cost pressures was widely linked to higher fuel prices and efforts by suppliers to pass on rising transportation bills. Strong wage inflation was also reported.
Finally, prices charged inflation picked up during September. Many firms noted that increased output prices reflected fuel surcharges and ongoing efforts to pass on higher payroll costs.
NatWest’s report on The Middle Speaks: Narrowing the mid-market conversion gap, through technology, talent and trade can be found here.
About the NatWest UK Business Growth Tracker
The NatWest UK Business Growth Tracker is a quarterly report designed to monitor business performance at UK small and medium-sized enterprises (1-249 employees) and mid-market corporates (50-500 employees). Results are compiled from responses to S&P Global UK Purchasing Managers’ Index™ (PMI®) surveys. We also track trade conditions, with a special feature on the UK Trade Outlook.
The panel of around 850 small and medium-sized enterprises and 230 mid-market enterprises is stratified by detailed sector, based on contributions to GDP.
Survey responses are collected by S&P Global in the second half of each month and indicate the direction of change compared to the previous month. A diffusion index is calculated for each survey variable. The index is the sum of the percentage of ‘higher’ responses and half the percentage of ‘unchanged’ responses.
The UK Business Growth Tracker indices vary between 0 and 100, with a reading above 50 indicating an overall increase compared to the previous month, and below 50 an overall decrease. The indices are then seasonally adjusted. Indices are compiled for a range of survey variables, including business activity, new orders, new export orders, employment, input costs, prices charged, suppliers' delivery times and future activity.
The UK Business Growth Tracker data for September were collected 10 – 28 September 2026. Composite data are available from January 1998. Manufacturing data are available from January 1992 and Services data from July 1996.
For further information on the PMI survey methodology, please contact economics@spglobal.com.
About NatWest
NatWest serves customers in England and Wales, supporting them with their personal, private, and business banking needs. NatWest helps customers at all stages in their lives, from opening student accounts, to buying their first home, setting up a business, and saving for retirement.
Alongside a wide range of banking services, NatWest offers businesses specialist sector knowledge in areas such as manufacturing and technology, as well as access to specialist entrepreneurial support.
About S&P Global (NYSE: SPGI)
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