Britain’s private sector grew at the fastest pace in eight months and a two-year jobs downturn ended, according to a closely watched survey that suggests the economy continued to defy the Iran war energy shock.

In a final snapshot before next week’s budget, S&P Global’s purchasing managers’ index jumped to 53.1 in October, up from 52 previously. It was much better than the fall to 51.7 expected by economists with the reading firmly above the 50 threshold separating growth and contraction.

Its employment index also suggested businesses marginally added to staffing levels for the first time in over two years. New orders rose at the quickest rate since 2024 with firms citing a boost to sales from investment in artificial intelligence.

The survey showed the UK economy continuing to confound economists’ predictions of a slowdown even as households and businesses are buffeted by the surge in energy prices. Forecasters had predicted a softer final quarter of 2026 after the surprisingly strong growth so far.

However, S&P said both the services and manufacturing sectors accelerated this month despite oil prices surging above $110 per barrel.

“This encouraging sign of economic resilience is underscored by firms taking on additional workers for the first time since hiring was hit by the 2024 autumn budget,” said Chris Williamson, chief business economist at S&P Global Market Intelligence. He said the strong October print came despite firms pausing spending due to uncertainty ahead of the budget on Oct. 28.

Williamson added that “the promising economic picture from the latest PMIs should provide an encouraging base for further robust economic growth through the winter months, barring any adverse surprises” at the budget.

A resilient economy will add to the case for the Bank of England to hike interest rates next month to fight inflation. S&P’s survey showed price pressures remained elevated with input costs climbing at the fastest pace since June.