London, Dec 16
Britain's private sector is facing a significant downturn in employment, with job cuts reaching their steepest rate in nearly four years, according to the latest S&P Global Flash UK PMI data released on Monday.
Private sector employment fell for the third consecutive month in December, with job losses the steepest since January 2021. Service providers were the hardest hit, facing declines due to unfilled vacancies and rising employment costs.
The report also revealed that the Composite Output Index remained steady at 50.5 in December, unchanged from November, just above the 50.0 threshold signaling growth. While the services sector saw modest growth, manufacturing activity sharply contracted, with its output index falling to an 11-month low of 45.7. Total new orders dropped for the first time in over a year, reflecting weaker business and consumer spending.
The recent rise in employers' National Insurance contributions, announced in the Autumn Budget by the Labour government, has prompted businesses to adopt more cautious workforce strategies, including reducing working hours and restructuring, Xinhua news agency reported.
Chris Williamson, chief business economist at S&P Global Market Intelligence, described the situation as a "triple whammy": "Businesses are reporting a triple whammy of gloomy news as 2024 comes to a close, with economic growth stalled, employment slumping, and inflation back on the rise. The loss of confidence and increased culling of jobs hints at worse to come as we head into the new year."
Survey respondents cited fragile consumer confidence, tighter corporate budgets, and reduced non-essential spending as key growth obstacles. Declining demand from European clients and competitive pressures worsened export challenges, leading to the steepest drop in export sales since October 2023.
Rising salary, transport, and raw material costs have further squeezed margins, while input price inflation accelerated for the second consecutive month, with manufacturers reporting the steepest rise in purchasing costs since January 2023.
Business optimism for the year ahead has also weakened, reaching its lowest level since December 2022, with many companies concerned about higher taxes and weak demand in sectors like automotive and manufacturing. Despite modest growth in services, the overall economic outlook remains bleak as the year ends.