Mid-market firms remained the growth engine of the UK private sector economy during the past month. according to the NatWest UK Business Growth Tracker data. The Tracker – which has reportedly surveyed mid-market businesses operating in the manufacturing as well as services sectors – declined from August’s 13-month high of 56.4 to 51.6 in September. A somewhat modest upturn in mid-market business activity “contrasted with stalling output across the UK private sector as a whole (50.1).”
Although some mid-market firms mentioned that a seemingly tentative pick-up in market conditions and new customer acquisitions had enabled growth, others said that subdued business investment and weak 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 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 experienced the greatest declines in output volumes during the past month, while service providers signaled a fairly moderate rate of contraction.
Sebastian Burnside, NatWest’s Chief Economist, said that UK business confidence has been on a “rollercoaster ride” over the past three months, but mid-market companies rounded out the quarter in a strong position.
They also noted that with so much changing on local and international fronts, it’s not surprising to see activity vary from month to month. However, it’s also encouraging to see businesses reporting “signs of cost pressures starting to ease, hopefully setting the scene for stronger growth into 2026.”
Andy Gray, MD of Commercial Mid-Market at NatWest said that the resilience as well as adaptability of the United Kingdom’s mid-market firms is clearly demonstrated, as they drive growth even as “broader” market conditions remain somewhat mixed.
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 numbers at SMEs decreased for the 12 straight month in September this year.
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 burdens faced by mid-market businesses continued to increase at the end of the third quarter.
Meanwhile, the overall rate of cost inflation declined to its lowest since November 2024 and was reportedly below the post-pandemic average.
At SMEs, overall cost inflation was the second-lowest since December 2024, with construction, manufacturing and service providers “recording slower rates of cost inflation than in the first half of the year.”
UK SMEs have reportedly remained confident about their business prospects for the upcoming year, even though optimism levels dropped from August’s 10-month high. All three sub-sectors saw confidence weaken significantly in the last month. But Mid-market firms were generally upbeat in September of 2025.