In August, ten of the 14 sectors monitored said that they had increased their headcount month-on-month – one more than in July (nine) and the most since April 2023.

Real Estate (54.7) businesses hired at the fastest pace of any monitored sector, with Financial Services providers (54.2), Software Services firms (53.9) and Technology Equipment manufacturers (53.7) also hiring at a strong pace – the latter increasing its headcount for the first time in a year. A reading on the Tracker above 50.0 indicates expansion, while a reading below 50.0 indicates contraction.

August also saw 11 of the 14 sectors monitored record output growth – the highest number since May 2024, and the joint-highest number since March 2022.

Meanwhile, eight sectors saw demand – as measured by new orders – rise, one fewer than in July (nine).

For a second month in a row, food and drink manufacturers saw output grow at the fastest pace of any monitored sector (60.6 in August vs. 59.2 in July), driven by the strongest rise in demand of all surveyed sectors (71.8 vs. 55.4).

However, for the first time in more than two years, food and drink producers also saw their backlogs of work grow (55.7 in August vs. 48.7 in July), while they reduced their headcount for a second month (46.7 in August vs. 49.1 in July).

In August, 13 sectors saw input costs rise, one fewer than in July (14). The tourism and recreation sector – which includes pubs, hotels, restaurants and leisure facilities – saw costs rise at the fastest pace of any monitored sector (63.2 in August vs. 63.0 in July), driven by food, wages and price increases from suppliers.

However, nine of the 14 monitored sectors registered cost inflation below the long-term average, based on data stretching back to 1998.

Nikesh Sawjani, Senior UK Economist, Lloyds Bank, said: “Our latest report shows that businesses are feeling confident when it comes to their own hiring intentions as they recruit to meet robust client demand. This should translate into higher output across more sectors, and provides an encouraging sign that the UK economy resumed growing in August having stagnated in June and July.”

Aled Patchett, Head of Consumer at Lloyds Bank, said: “Management teams will welcome weaker cost pressures having faced more sharp and sustained prices in recent months. What will be interesting to see is whether this is reflected in the prices businesses charge to customers in the longer term.

“Some firms will be in a stronger position than others to manage any price hikes. Businesses will be keeping a close eye on any monetary policy decisions to help them balance their pricing strategy while maintaining a competitive advantage.”