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  • Strongest growth at mid-market service providers for 15 months
  • Mid-market optimism rebounds from April's low point, but weak employment trends continue
  • SMEs record a sustained downturn in output levels during June, led by the manufacturing sector  

 

Mid-market businesses continued to drive growth across the private sector economy in June, with output levels expanding at the fastest pace for eleven months amid a robust and accelerated upturn in the service economy, the latest NatWest UK Business Growth Tracker has found.

The Tracker – which surveyed mid-market businesses operating in the manufacturing and services sectors – jumped from 51.5 in May to 55.6 in June, recording the steepest rate of growth since last July. This contrasted with only a modest increase in output across the UK as a whole (52.0).

Mid-market businesses indicated that improved demand conditions, stronger sales pipelines and new product launches drove higher output last month. The mid-market service sector was solely responsible for the upturn and recorded its quickest increase in activity for 15 months in June (index: 57.3) – contrasting with weaker output across the SME service sector.

Small and medium-sized enterprises (SMEs) meanwhile signalled subdued business conditions during June, with output and incoming new orders remaining on a downward trajectory. The NatWest SME Business Activity Index – which surveyed SMEs in the construction, manufacturing and service sectors – fell from 49.3 in May to 47.9 in June. The downturn was led by the SME manufacturing sector (index: 42.7) – where the latest data marked a reduction in new orders.

 

Sebastian Burnside, NatWest’s Chief Economist, said: “It’s really encouraging to see the UK’s mid-market businesses report the strongest growth in nearly a year in June. Their ability to adapt swiftly to changing market conditions, coupled with their scale and resource access, positions them uniquely to lead the UK’s growth agenda.

“After a rollercoaster year for UK business sentiment, we are starting to see signs of improvement. Small and medium-sized businesses have found the environment challenging, but positively confidence has picked up since April’s 29-month low. This suggests that receding concerns about the impact of US tariffs and lower input cost inflation are having some impact.

“Companies remain in wait-and-see mode on hiring, as the combination of wages pressures and efforts to reduce overheads encourages firms to look for productivity gains where possible. However, the easing of price pressures will provide some relief as that should allow further cuts in interest rates later in the year.”

 

Robert Begbie, CEO of NatWest Commercial & Institutional, said:

“Today’s data validates our view that mid-market firms are essential engines of UK economic growth that deserve our focused attention and support. 1% growth in this segment could add £35bn gross value add to the UK economy and £115bn in business turnover by 2030 – so it’s crucial that we give these firms the backing and support they need.

“This is why we have taken the initiative to convene a Mid-market Growth Council, giving these businesses a cohesive identity to collectively advocate and influence for growth enabling policies and support. By tracking the performance of businesses, we are able to visualise the opportunities and challenges they face, so we can support them to grow.”

 

Mid-market companies record solid increase in new business in June

There was a slight improvement in order books across the wider UK private sector in June. New business received by mid-market companies grew at the fastest pace in seven months in June, buoyed by improved demand conditions, stronger sales pipelines and new product launches. This contrasted with total new work at SMEs which decreased at a solid rate in June.

 

Employment falls modestly for businesses of all sizes

Workforce numbers at mid-market firms declined in June, as has been the case in seven of the past eight months. Although the rate of job losses picked up from May, it remained modest and weaker than those seen at the start of the year. Challenging business conditions and rising payroll costs also weighed on staff hiring at SMEs. June data indicated a reduction in overall employment for the ninth successive month.

 

Output price inflation slows

June survey data signalled a notable easing in the rate of output charge inflation at mid-market companies. Though solid, the latest increase in prices charged for goods and services was the slowest seen in four-and-a-half years. Average prices charged by SMEs increased at the slowest pace for nine months in June.

 

Businesses remain optimistic about their trading prospects

Looking ahead, SMEs remain optimistic about their prospects for business activity growth in the next 12 months. The degree of confidence held close to May’s seven-month high, supported by resilient business expectations in the services and manufacturing sectors.

Mid-market companies generally anticipate business activity to increase from current levels over the next year. The level of optimism was slightly below the long-run trend, but stronger than that seen across the UK as a whole. 

 

MEDIA CONTACT

NatWest: Lucy Chislett, Media Relations Manager on 0797486900 or lucy.chislett@natwest.com

NatWest UK Business Growth Tracker

Download the latest NatWest UK Business Growth Tracker.

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Notes to editors

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 (100-2,500 employees). Results are compiled from responses to S&P Global UK Purchasing Managers’ Index™ (PMI®) surveys. We also track sustainability actions across five main categories.

The panel of around 850 small and medium-sized enterprises and 330 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, employment, input costs, prices charged, suppliers' delivery times and future activity.

The UK Business Growth Tracker data for March were collected 12 – 27 June 2025. Composite data are available from January 1998. Manufacturing data are available from January 1992, Services data from July 1996 and Construction data from April 1997.

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)

S&P Global provides essential intelligence. We enable governments, businesses and individuals with the right data, expertise and connected technology so that they can make decisions with conviction. From helping our customers assess new investments to guiding them through ESG and energy transition across supply chains, we unlock new opportunities, solve challenges and accelerate progress for the world.

We are widely sought after by many of the world’s leading organizations to provide credit ratings, benchmarks, analytics and workflow solutions in the global capital, commodity and automotive markets. With every one of our offerings, we help the world’s leading organizations plan for tomorrow, today. www.spglobal.com.

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