Employment across the UK services sector continued to decline even as fresh data pointed to a pickup in broader economic growth, according to the latest purchasing managers' survey from S&P Global. The services sector accounts for roughly 80 per cent of the UK economy, making sustained hiring weakness there a broad signal for the national labour market.

The findings revealed that private sector employers reduced headcount for the 22nd straight month in July, a streak that analysts compared to employment downturns witnessed during the 2008 Great Financial Crisis and the dotcom crash. What sets the current episode apart is that it is occurring alongside expanding output rather than a contracting economy, suggesting firms are choosing productivity gains, automation, or cost containment over hiring even as demand recovers.

The headline purchasing managers' index (PMI) for the UK economy registered 52.2 in July, staying above the 50 threshold that separates expansion from contraction. The PMI is widely regarded as a leading indicator of business performance.

Quotes and Reactions

"A rebound in both activity and new business could not prevent a further decline in staffing numbers, with job losses seen for the twenty-second consecutive month," said Tim Moore, director at S&P Global. "The current duration of falling employment is a joint-record in 30 years of data collection."

Shadow business secretary Andrew Griffith called the figures a "damning indictment of this government's economic failure."

"Labour's disastrous Employment Rights Act, coupled with the jobs tax and business rates hikes, have sent businesses to the wall," Griffith said. "The fact that we have the longest run of services sector job losses since the global financial crisis is a damning indictment of this Government's economic failure."

Unemployment Data

Official figures show that since Labour took office, the unemployment rate has risen from 4.4 per cent to 4.9 per cent, equating to approximately 150,000 additional people out of work. This figure excludes economically inactive individuals, such as those who have entered education, retired, or are not actively seeking employment.

Signs of Easing

Despite the prolonged downturn, there were tentative signs of improvement. The rate of job cuts in the most recent month was the softest recorded since October 2025. Survey respondents—numbering in the hundreds—reported that the latest increase in input prices was significantly lower than the peaks observed in April, reaching a five-month low.

Geopolitical and Economic Context

During July, hostilities between Iran and the United States largely subsided before tensions resurfaced later in the month, with oil prices briefly touching $100 per barrel. The UK is a net importer of energy, meaning that sustained elevated oil prices feed directly into consumer inflation and business operating costs.

Economists have broadly stated that the trajectory of the UK economy hinges on the progress of a Middle East peace process and the reopening of the Strait of Hormuz. The Bank of England has cautioned that a renewed escalation of conflict would likely force it to raise interest rates to counter potential inflationary pressures. Higher rates would add to borrowing costs for businesses already hesitant to hire.

Martin Beck, chief economist at WPI Strategy, warned that the recent uptick in oil and petrol prices could "squeeze household incomes and business margins, potentially dragging activity lower again." However, he noted that a temporary boost from the World Cup and favorable weather conditions had likely benefited service sector firms, particularly those in hospitality.

"While a welcome improvement, this probably shouldn't be taken for a decisive turning point," Beck added.