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Growth in UK business activity rose slightly in January, but job cuts continued as cost inflation accelerated, according to a closely watched survey pointing to a ‘stagflationary environment’ .
S&P Global’s composite flash UK PMI output 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 value above 50 suggests that most companies are reporting business growth.
According to the survey, despite the rise in the composite index, employment levels fell for the fourth consecutive month, with businesses often linking this to growing cost pressures. S&P Global said that excluding the pandemic period, the rate of job losses reported 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 sluggishness of the UK economy, with companies cutting staff amid falling sales and concerns about the business outlook.” “.
He warned that inflationary pressures had “reignited, pointing to a stagflationary environment which poses a growing policy dilemma for the Bank of England”.
