UK economy’s rebound fails to stem two years of mass job losses
A rebound in the UK economy over August has failed to turn around the country’s flagging labour market after nearly two years of job losses, new estimates have shown. Data tracked by S&P Global suggested the UK’s private sector grew at the fastest pace in four months in August despite concerns around business costs and [...]
Despite the UK economy experiencing a surge in growth, an extended period of job losses continues unabated. New estimates from S&P Global reveal that despite the private sector's fastest growth in four months in August, job cuts have persisted for 23 consecutive months - a record since surveys began in 1996. The unemployment rate has risen from 4.4% to 4.9% since Labour assumed office in mid-2024, according to the data tracked by S&P Global.
Chris Williamson, chief business economist at S&P Global, noted that while firms are more optimistic than they've been since the war, high energy prices and supply disruption from the Middle East conflict continue to hamper the economy. He attributed the slowdown to cost pressures, including high staffing costs. The minimum wage and national insurance hikes introduced by Labour in their 2024 budget have significantly increased companies' operational costs, triggering a slowdown in hiring.
The overall PMI for the private sector stood at 52.5, above the 50 value indicating no change, and surpassed last month's score of 52.2. However, the manufacturing sector's growth slowed as its reading declined from 51.9 to 51.5. Rob Wood, chief UK economist at Pantheon Macroeconomics, suggested that the economy could outperform the Bank of England's growth expectations for the third quarter, estimating an average PMI over July and August consistent with a quarter-to-quarter GDP growth of 0.2%.
However, the "Andrew Burnham boost" might fade as budget uncertainty looms in the autumn, while higher energy prices will continue to dampen demand.
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