UK businesses are reducing staff numbers at the fastest rate since February, according to new data, as higher payroll taxes and uncertainty over US tariffs put increasing pressure on company costs and consumer demand.
The flash S&P Global purchasing managers’ index (PMI) for July showed a further slowdown in economic momentum, with fresh orders falling, export sales contracting, and employers citing the need to cut headcounts due to rising costs and subdued demand.
“Survey respondents widely commented on the need to reduce headcounts in response to higher payroll costs and subdued customer demand,” the report noted.
The PMI, a key indicator of private sector health, fell from 52 to 51 in July, signalling continued but weakening growth. A figure above 50 suggests expansion, while anything below indicates contraction. Most of the decline came from the services sector, which fell from 52.8 to 51.2, while manufacturing output ticked up slightly to 50.
The survey findings are likely to intensify pressure on the Bank of England, which is widely expected to cut interest rates from 4.25% to 4% at its next meeting in a fortnight in an effort to lift an economy showing signs of stagnation.
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