Firms accelerate job cuts as 12-month growth run ends
UK firms accelerated job cuts in May as a 12-month growth streak ended, with the services sector PMI hitting its lowest level since January 2021. Labour’s leadership uncertainty and rising input costs, driven partly by global trade disruptions, contributed to economic slowdown, while unemployment rose to five percent and youth unemployment reached an 11-year high.
UK private-sector employers intensified job cuts in May, ending a 12-month period of growth, according to S&P Global data. The services sector’s purchasing managers’ index (PMI) fell to 48.5, below the 50 threshold for neutral activity, marking its weakest reading since January 2021 and the lowest in nearly a decade outside the pandemic. Meanwhile, manufacturing remained the only sector with positive PMI growth. Analysts attributed the downturn to persistent input cost inflation, partly due to trade disruptions linked to the Iran conflict, and political uncertainty surrounding Labour’s leadership. Jake Finney, a senior economist at PwC, noted that global supply chain and political risks were weighing on the economy, with May’s decline more severe than expected. Separate data from the Office for National Statistics (ONS) showed rising cost pressures, with 40% of businesses reporting higher input prices in April—the highest since December 2022. Around 16% reported increased output prices, the highest since April 2023, while economic uncertainty was cited by 34% of businesses as a turnover challenge, up 13 percentage points from two years prior. Larger firms with 10+ employees identified labor costs as their top concern, with 40% citing wages as a drag. Official unemployment data revealed a rise to 5%, with vacancies hitting a five-year low and youth unemployment reaching an 11-year peak. The combined pressures suggest deepening economic strain in the UK.
This content was automatically generated and/or translated by AI. It may contain inaccuracies. Please refer to the original sources for verification.