UK service suppliers have reduce employment for a fifth consecutive month, based on the most recent S&P International buying managers’ index (PMI), marking the longest run of job shedding since early 2011 exterior of the pandemic interval.
The survey factors to considerations over a “loss of growth momentum” for the reason that autumn finances, with many companies attributing belt-tightening to the Chancellor’s announcement of a £25 billion improve in employers’ Nationwide Insurance coverage contributions.
Tim Moore, Economics Director at S&P International Market Intelligence, famous that the sector has witnessed a “clear loss of growth momentum” in current months. Whereas official estimates from the Workplace for Nationwide Statistics nonetheless put the UK unemployment price at a traditionally low 4.4 per cent, the PMI survey knowledge counsel companies stay cautious about hiring, particularly amid mounting value pressures.
Economists warning that the PMI figures could overstate the tempo of slowdown. Rob Wooden, Chief UK Economist at consultancy Pantheon Macroeconomics, argues that the indicator “exaggerates economic weakness” as a result of it gauges solely the variety of companies decreasing output or reducing workers, not the extent of the reductions.
In the meantime, consideration is popping to the spring assertion on 26 March, the place the Chancellor is anticipated to ponder additional cuts in public spending to remain inside her fiscal guidelines. The Workplace for Price range Accountability is tipped to warn that the Chancellor’s £9.9 billion fiscal buffer, outlined final October, has all however evaporated beneath the load of upper authorities bond yields and tempered financial progress.
February’s closing companies PMI studying edged as much as 51 from 50.8 in January, surpassing the essential 50-point threshold that separates growth from contraction. Nevertheless, that determine was a slight downgrade from the sooner flash estimate. Throughout the broader UK non-public sector, the composite PMI slipped marginally from 50.6 to 50.5, pointing to a sluggish begin to the primary quarter.
Thomas Pugh, Economist at RSM UK, remarked that these subdued figures trace at “more of a flatline in economic activity,” although he additionally shares the view that the PMI readings could also be underestimating precise progress. Some analysts counsel that lingering impacts from President Trump’s tariffs proceed to weigh on UK manufacturing particularly, on condition that sector’s vulnerability to shifting commerce limitations.
