UK service providers have cut employment for a fifth consecutive month, according to the latest S&P Global purchasing managers’ index (PMI), marking the longest run of job shedding since early 2011 outside of the pandemic period.
The survey points to concerns over a “loss of growth momentum” since the autumn budget, with many firms attributing belt-tightening to the Chancellor’s announcement of a £25 billion increase in employers’ National Insurance contributions.
Tim Moore, Economics Director at S&P Global Market Intelligence, noted that the sector has witnessed a “clear loss of growth momentum” in recent months. While official estimates from the Office for National Statistics still put the UK unemployment rate at a historically low 4.4 per cent, the PMI survey data suggest businesses remain cautious about hiring, especially amid mounting cost pressures.
Economists caution that the PMI figures may overstate the pace of slowdown. Rob Wood, Chief UK Economist at consultancy Pantheon Macroeconomics, argues that the indicator “exaggerates economic weakness” because it gauges only the number of firms reducing output or cutting staff, not the extent of the reductions.
Meanwhile, attention is turning to the spring statement on 26 March, where the Chancellor is expected to contemplate further cuts in public spending to stay within her fiscal rules. The Office for Budget Responsibility is tipped to warn that the Chancellor’s £9.9 billion fiscal buffer, outlined last October, has all but evaporated under the weight of higher government bond yields and tempered economic growth.
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