Businesses ‘buoyed’ by spike in new work post-Budget, but job-cutting persists

Growth in the UK’s private sector has sped up this month with businesses “buoyed” by a flow of new work after the Budget, despite persistent job-cutting, a new survey suggests.

The S&P Global flash UK composite purchasing managers’ index (PMI) reported a reading of 52.1 in December, up from 51.2 in November.

The flash figures are based on preliminary data. Any score above 50.0 indicates that activity is growing while any score below means it is contracting.

December’s data suggested the strongest upturn in the level of new work for firms in 14 months, which mainly reflected improved demand for the services sector.

Respondents of the survey pointed to improved confidence among their clients – which previous data indicated had deteriorated in November ahead of the Government’s autumn Budget statement.

New work from abroad also picked up at the end of the year, ending a 13-month period of decline.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said the latest survey brings “welcome news on faster economic growth at the end of the year, with businesses buoyed in part by the post-Budget lifting of uncertainty”.

“It’s a big relief that business confidence has not slumped in a repeat of last year’s post-Budget gloom,” he said.

“Instead, companies have ended the year on a slightly more optimistic note amid signs of improving demand now that some of the uncertainty created by the Budget has cleared.”

But Mr Williamson noted that the growth in output among private companies was “still very dependent on technology and financial services activity, with many other parts of the economy struggling to grow or in decline”.

“Job losses are also again worryingly widespread, and it remains to be seen whether the uptick in orders during December will persuade more companies to start hiring again,” he said.

Despite the overall uplift to activity, staffing numbers decreased for the 15th month in a row in December, the PMI indicated.

This was particularly the case in the service sector, with lower employment often attributed to intense cost pressures.

Mr Williamson said the data suggests that the Bank of England is likely to cut interest rates on Thursday in a bid to help stimulate the economy amid “sluggish growth and worrying jobs data”.