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  • Business activity growth led by mid-market service providers in September
  • Elevated growth expectations reported at mid-market firms, helped by easing input cost inflation
  • SMEs experience another decline in business activity, but new orders fall to the smallest extent so far in 2025

 

Mid-market companies remained the growth engine of the UK private sector economy in September. according to the latest NatWest UK Business Growth Tracker data.

The Tracker – which surveyed mid-market businesses operating in the manufacturing and services sectors – fell from August’s 13-month high of 56.4 to 51.6 in September. A modest upturn in mid-market business activity contrasted with stalling output across the UK private sector as a whole (50.1).

While some mid-market firms mentioned that a tentative pick-up in market conditions and new customer wins had supported growth, others noted subdued business investment and soft consumer demand as limiting factors. Mid-market growth continued to be centred on the services economy (index: 52.6), although the expansion here was the weakest in four months and only modest overall. Manufacturing output meanwhile fell at a solid pace that was the quickest in ten months (index: 46.4).

Although small and medium-sized enterprises (SMEs) continued to face a challenging business environment in September, the decline in new orders was the least marked seen across 2025 so far. The NatWest SME Business Activity Index – which surveyed SMEs in the construction, manufacturing and service sectors – fell slightly from 47.1 in August to 46.9 in September. SMEs in the construction and manufacturing sectors indicated the sharpest declines in output volumes during September, while service providers signalled only a moderate pace of contraction.

 

Sebastian Burnside, NatWest’s Chief Economist, said:

“UK business confidence has been on a rollercoaster ride over the last three months, but mid-market firms rounded out the quarter in a solid position. With so much changing on both domestic and international fronts, it’s no surprise to see activity vary substantially from month to month. But it’s encouraging to see businesses reporting signs of cost pressures starting to ease, hopefully setting the scene for stronger growth into 2026.”

 

Andy Gray, Managing Director of Commercial Mid-Market at NatWest said:

“The resilience and adaptability of the UK’s mid-market firms is clearly demonstrated, as they continue to drive growth even as broader market conditions remain mixed.

“While challenges persist, particularly for SMEs, it’s encouraging to see that mid-market businesses are showing elevated growth expectations and responding positively to easing cost pressures. At NatWest, we remain committed to supporting businesses as they navigate the evolving economic landscape and seize new opportunities for expansion.”

 

 

Mid-market companies record marginal drop in new business

Total new business placed at small and medium-size firms decreased for the tenth successive month in September, but to the least marked extent since December 2024. Across the mid-market, the overall volume of new work fell in September, marking the second reduction in three months. The contraction was only slight and a reversal on August's solid upturn.
 

Employment falls more prominently across the mid-market than at SMEs

Employment numbers at SMEs decreased for the twelfth consecutive month in September. However, the degree of job losses remained less marked than across the UK private sector as a whole. The level of employment across the mid-market economy was solid and marked the sixth reduction in successive months in September.


Cost pressures soften for businesses of all sizes

Cost burdens faced by mid-market businesses continued to rise sharply at the end of the third quarter. That said, the overall rate of cost inflation fell to its lowest since November 2024 and was below the post-pandemic average. At SMEs, overall cost inflation was the second-lowest since December 2024, with construction, manufacturing and service providers all recording slower rates of cost inflation than in the first half of the year.


Optimism fades, but remains firmly in positive territory

SMEs remained confident about their own business prospects for the year ahead, although optimism levels slipped from August's 10-month high. All three sub-sectors saw confidence weaken in September. Mid-market companies were also generally upbeat in September. Although down from August's recent high, the Future Activity Index recovered back above its long-run average. 

Download the latest NatWest UK Business Growth Tracker

Latest NatWest UK Business Growth Tracker

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MEDIA CONTACT

NatWest: Stephanie Melrose, Media Relations Manager on 07966212576 or stephanie.melrose@natwest.com

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 September were collected 11 – 29 September 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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