Britain in longest job slump since financial crisis, PMI shows

LONDON – Britain’s two-year job market downturn has lasted as long as the slump seen during the global financial crisis as firms cut costs and turn to artificial intelligence, according to a closely watched survey released on Aug 5.

S&P’s purchasing managers’ index showed services firms and employers across the wider private sector reducing headcount for a 22nd straight month in July.

While the pace of job losses eased slightly in July, the length of the downturn in the services sector now matches that seen during the 2008-09 financial crash. For the wider economy, it is one month short.

Firms reported that they are pruning staff numbers because of efforts to reduce costs, while others said they need fewer workers after investing in AI to help improve productivity.

The survey will deepen concerns over the state of the labour market since the Labour government took power in the summer of 2024. Businesses have blamed rises in payroll taxes and the minimum wage for forcing them to cut back on workers. Rapid advances in AI are also stoking concerns of the potential for widespread job losses in white-collar jobs.

The PMI measures the breadth of job cutting with readings below 50 indicating more firms reducing headcount than increasing it. Official figures show the unemployment rate is well below the peak reached after the financial crash, and there are signs that the job market downturn may have bottomed out in recent months.

The S&P survey showed headcount in July falling at the slowest pace since last October, while the economy returned to growth after a largely stagnant picture in May and June.

The overall PMI rebounded to 52.2 in July despite the re-escalation in tensions between the US and Iran, up from 49.3 the previous month, according to S&P’s final estimate. That was slightly above the flash reading of 52.1 with any score above 50 signalling growth.

“UK service providers moved back into growth mode during July as greater consumer spending and strong demand for technology services helped to boost overall business activity,” said Tim Moore, economics director at S&P Global Market Intelligence.

“Many firms cited geopolitical uncertainties and the Middle East conflict as factors limiting their growth trajectory, despite some signs of easing risk aversion among clients.” Bloomberg