UK service businesses have cut employment for the fifth successive month, according to the final S&P Global purchasing managers’ index (PMI) for February.
The survey’s data highlight what economists describe as a “loss of growth momentum” since the autumn budget, with some firms citing the Chancellor’s £25 billion increase in employers’ national insurance as a key factor.
This prolonged spell of job losses is the most extended period of contraction since early 2011, excluding the Covid-19 downturn. Tim Moore, Economics Director at S&P Global Market Intelligence, says reduced optimism and ongoing cost pressures “led to net job shedding across the service economy in February.”
Despite these figures, some analysts urge caution over the PMI’s apparent gloom. Rob Wood, Chief UK Economist at Pantheon Macroeconomics, points out that the index “asks only how many firms are cutting output or employment, rather than by how much.” Indeed, official data from the Office for National Statistics suggest unemployment remains near a historic low of 4.4 per cent.
The final services PMI reading edged up to 51 in February from 50.8 in January, remaining above the 50-point threshold that separates expansion from contraction. However, it was slightly below the preliminary “flash” reading. The composite PMI, which gauges activity across the entire UK private sector, slipped marginally to 50.5 from 50.6.
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