UK Job Market Slump Longest Since Early 2000s

Britain’s job market is experiencing its longest downturn since the early 2000s, according to S&P Global’s UK purchasing managers’ index (PMI). Employers have reduced staff for 24 consecutive months, surpassing the decline seen during the financial crisis. The data comes as a concern for Andy Burnham’s government ahead of the upcoming budget, with rising energy costs and artificial intelligence (AI) potentially reducing demand for workers. Job cuts in the services sector were the smallest in nearly a year, and the official unemployment rate remains lower than post-financial crisis levels.

The labor market has been weak despite a resilient first half of the year for the broader economy. S&P’s survey suggests the private sector is holding up against the energy shock, supported by stronger consumer spending and technology services driven by AI adoption. The composite PMI fell slightly to 52 in September from 52.5 the previous month, staying above the 50 threshold that separates growth from contraction.

However, the outlook has worsened due to rising energy prices, prompting traders to anticipate multiple interest rate hikes by the Bank of England to curb inflation. 'Subdued demand conditions and rising inflationary pressures contributed to weaker business activity expectations for the year ahead,' said Tim Moore, economics director at S&P Global Market Intelligence. The survey also indicated growing price pressures, with firms reporting the fastest rise in costs and customer charges since June.