UK Private Sector Experiences Sharpest Drop in Employment in Four Years
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London, Dec 16 (NationPress) The United Kingdom's private sector is undergoing a notable decline in employment, with job reductions occurring at their highest pace in nearly four years, based on the recent S&P Global Flash UK PMI data unveiled on Monday.
In December, private sector jobs decreased for the third month in a row, marking the most significant job losses since January 2021. Service industries were the most affected, experiencing declines due to unfilled job vacancies and increasing employment costs.
The report further indicated that the Composite Output Index held steady at 50.5 in December, remaining unchanged from November and just above the 50.0 mark, which indicates growth. While the services sector experienced slight growth, manufacturing output sharply declined, with its index falling to an 11-month low of 45.7. Additionally, total new orders decreased for the first time in over a year, signaling weakened business and consumer spending.
The recent increase in employers' National Insurance contributions, announced in the Autumn Budget by the Labour government, has led businesses to adopt more prudent workforce strategies, such as reducing working hours and restructuring, as reported by Xinhua news agency.
Chris Williamson, chief business economist at S&P Global Market Intelligence, characterized the scenario as a 'triple whammy': "Businesses are reporting a triple whammy of gloomy news as 2024 approaches, with economic growth stalled, employment declining, and inflation rising once again. The loss of confidence and heightened job cuts suggest that more difficulties lie ahead as we enter the new year."
Survey participants pointed to fragile consumer confidence, stricter corporate budgets, and lower non-essential spending as significant barriers to growth. Diminishing demand from European clients and competitive challenges exacerbated export difficulties, culminating in the steepest fall in export sales since October 2023.
Increasing costs related to salaries, transportation, and raw materials have further pressured profit margins, while input price inflation accelerated for the second successive month, with manufacturers noting the most significant increase in purchasing costs since January 2023.
Business optimism for the upcoming year has also deteriorated, reaching its lowest point since December 2022, with many firms expressing concerns over rising taxes and weak demand in sectors such as automotive and manufacturing. Despite slight growth in services, the overall economic outlook remains dismal as the year comes to a close.
