UK business activity rises but job cuts and inflation point to ‘stagflation’, survey shows
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Growth in UK business activity picked up in January, but job losses continued as cost inflation accelerated, according to a closely watched survey pointing to a “stagflationary environment”.
The S&P Global flash UK PMI composite manufacturing index, which tracks private sector activity, rose to a three-month high of 50.9 points in January from 50.4 in December.
Economists polled by Reuters had expected the index to fall slightly to 50 points. Any reading above the 50 mark suggests that most businesses are reporting an increase in activity.
Despite the rise in the composite index, employment levels fell for the fourth month in a row, according to the survey, which businesses often attribute to rising cost pressures. S&P Global said that, with the exception of the pandemic period, the rate of job losses signaled by the PMI over the past two months was the highest since the 2009 global financial crisis.
Chris Williamson, economist at S&P Global Market Intelligence, said the survey results “add to the gloom of the UK economy, as companies cut jobs due to falling sales and concerns about the business outlook”.
He warned that inflationary pressures had “rekindled, pointing to a stagflationary environment that presents an increasing policy difficulty for the Bank of England”.
