Since the UK is largely believed to be in a recession, fewer people are employed by private enterprises there than they have in nearly two years.
According to a recent study, headcounts have fallen so far this month, marking the first decline in employment since February 2021.
Companies said that they were not replacing employees who left on their own accord because they were concerned about the state of the economy, were receiving less orders, and were looking for ways to save money.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said: “It’s not surprising to see that businesses are battening down the hatches, most notably by reducing headcounts, in an indication that the slump not only has further to go but could possibly accelerate again.”
The manufacturing industry was responsible for the decline in employment, while employment in the service industry stagnated after 21 months of expansion.
It happens despite the monthly S&P Global/CIPS flash PMI statistics having a better-than-expected reading.
In the preliminary December flash readings, the private sector was projected to receive a score of 48. The reading, which was made public on Friday morning, was 49 points, up from 48.2.
However, Mr. Williamson said that the minor improvement in the downturn—anything below 50 is thought to indicate a contraction in the economy—is probably insufficient to prevent a recession.
The PMI indicates a 0.3% GDP reduction in the fourth quarter after the 0.2% decline reported in the three months to September, which, according to the December data, increases the chance that the UK is in a recession.
Customers were making cuts across the board in December as new order levels in the manufacturing and services industries continued to decline. For the first time since February 2021, the UK’s struggling economy had an impact on job creation, particularly in the manufacturing sector.
“Due to weak demand and disrupted supply chains, raw materials and products like electronic components were unable to be delivered, causing the manufacturing sector to see another abrupt decline in output that was the fastest since August.
“Manufacturers started to question the need for their current headcounts and lose jobs at a quicker pace without a strong economic wind behind them.”
After exhibiting uneven performance over the previous few months, the service sector activity improved in December, but was nonetheless hampered by high expenses.