22 months of cuts: Jobs crisis deepens despite growth boost
A jobs slump across the services sector deepened despite new data suggesting that the UK economy benefitted from a boost to growth.
Researchers at S&P Global showed that employment had been cut across the private sector for the 22nd straight month.
The overall purchasing managers’ index score for the UK economy, which is a leading indicator of performances among businesses, came to 52.2 in July, above the 50 neutrality mark for no change activity.
The contrast between services growth and job cuts reflects broader shifts across the UK economy as analysts said the prolonged period of employment struggles compared to trends seen during the 2008 Great Financial Crisis and the fall-out of the dotcom bubble crash.
“A rebound in both activity and new business could not prevent a further decline in staffing numbers, with job losses seen for the twenty-second consecutive month,” S&P Global director Tim Moore said.
“The current duration of falling employment is a joint-record in 30 years of data collection.”
Andrew Griffith, the shadow business secretary, said the figures were a “damning indictment of this government’s economic failure”.
“Labour’s disastrous Employment Rights Act, coupled with the jobs tax and business rates hikes, have sent businesses to the wall,” he said.
“The fact that we have the longest run of services sector job losses since the global financial crisis is a damning indictment of this Government’s economic failure.”
Official data has shown that, since Labour were elected, the unemployment rate has jumped from 4.4 per cent to 4.9 per cent, meaning around 150,000 more people are out of work. This does not include people who are inactive, such as people who have moved into education or retirement or who are not actively seeking work.
Jobs problems persist
In perhaps more comforting news for employees and job seekers, the latest month of job cuts was the softest rate recorded since October 2025.
Hundreds of firms responding to the monthly survey said the latest increase in input prices was also far lower than peaks seen in April and came to a five-month low.
In July, hostilities between Iran and the US broadly drew to a close before tensions flared up again later in the month, with oil prices briefly skimming $100 per barrel.
Economists have widely said that the UK economy’s performance largely depends on the outcome of a peace process in the Middle East and the re-opening of the Strait of Hormuz.
The Bank of England has warned that, in the event war breaks out again, it would likely have to raise interest rates to ease concerns about a spike in inflation.
WPI Strategy chief economist Martin Beck said a recent rise in oil and petrol prices could “squeeze household incomes and business margins, potentially dragging activity lower again”.
But he added that a temporary boost from the World Cup and good weather had likely benefitted several service sector firms operating across the hospitality industry.
“While a welcome improvement, this probably shouldn’t be taken for a decisive turning point,” Beck said.