UK private sector growth slows as job cuts worsen

In July 2025, the private sector in the United Kingdom reported a slowdown in growth as companies initiated significant job cuts amid rising operational costs. The S&P Global flash composite purchasing managers' index (PMI) indicated a reading of 51, indicating growth but at a slower pace compared to a higher reading of 52 in June. This reading was also below economists' expectations of 51.8, highlighting worsening economic conditions. Factors contributing to this slowdown included declining order books, diminished business confidence, and heightened costs associated with policy changes from the previous autumn's budget. The service sector had been mainly responsible for the growth noted in July, with an observed increase in consumer spending. However, businesses within this sector cited ongoing challenges related to fragile domestic economic conditions coupled with broader uncertainties in the market. Notably, manufacturing production appeared to stabilize after eight months of declines, though manufacturers still faced difficult market conditions, especially due to repercussions from changes related to US tariffs. Another critical element involved a decrease in total new work from the private sector, reaching its lowest level in three months. This downturn in new business created a direct effect on employment levels, leading to the fastest rate of job shedding recorded since February. The job cuts impacted both manufacturing and service sectors, as businesses pointed to increased labor costs stemming from rises in national insurance contributions and minimum wage requirements as primary factors for restructuring their workforce. Chris Williamson, the chief business economist at S&P Global Market Intelligence, expressed concern over the consequences of sustained budget measures on employment within the UK. He noted that rising staffing costs were worsening companies' apprehensions regarding payroll management in an environment characterized by weak demand. This combination resulted in further reductions in workforce numbers as businesses attempted to adjust to the challenging economic landscape.