UK businesses have been cutting jobs at fastest rate since 2020, says new data

The headline S&P Global flash UK composite purchasing managers’ index (PMI), based on preliminary data, reported a reading of 50.5 for February, down from January’s 50.6. Any score above 50.0 indicates that activity is growing, while any score below means it is contracting.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said the early data for February indicates that “business activity remained largely stalled for a fourth successive month, with job losses mounting amid falling sales and rising costs”.

“The lack of growth alongside rising price pressures points to a stagflationary environment which will present a growing dilemma for the Bank of England,” he said.

Input cost inflation increased in February for the fourth month in a row, according to the survey, which businesses largely linked to higher salary payments and the impact of suppliers seeking to pass on upcoming increases to employer national insurance contributions.

Mr Williamson added: “A key factor behind the upturn in inflationary pressures is the growing number of firms reporting the need to raise prices in order to help offset the impending rise in staff costs associated with the national insurance hike and uplift to the minimum wage announced in the autumn Budget. Companies also reported that the Budget changes played a major role in driving intensifying job cuts. Employment fell sharply again in February, dropping at a rate not seen since the global financial crisis if pandemic months are excluded.”