According to the latest purchasing managers’ index (PMI) survey, businesses are reducing staff at the fastest rate since the 2008 financial crisis. The survey, monitoring 650 manufacturers and 650 service sector firms, revealed employment levels have fallen this month at a pace not seen since 2009, excluding the pandemic period.
Weaker consumer confidence, tighter corporate budgets, and cuts to non-essential spending were widely cited as growth barriers. Businesses also reported that rising salary payments and domestic inflation have contributed to squeezed profit margins. Combined, these pressures led to a sharp decline in private sector headcount.
The PMI for December held steady at 50.5, unchanged from November, indicating marginal growth across manufacturing and services. However, S&P Global highlighted that December’s workforce reductions were the steepest since January 2021, when furlough schemes softened the impact of the pandemic.
In response to mounting economic concerns, the Treasury has commissioned the Office for Budget Responsibility (OBR) to produce fresh projections. Though the next formal budget is only due in autumn 2025, Rachel Reeves is expected to address MPs with updates.
Meanwhile, official data showed a 0.1% contraction in the UK economy in October. This underscores the challenges facing Keir Starmer’s goal to achieve the fastest-growing G7 economy. Despite cooling in recent months, the job market remains resilient, with annual wage growth still at historically high levels.
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