British services firms experienced the most rapid staff reductions since 2020 in February, according to the preliminary UK S&P Composite Purchasing Managers' Index (PMI). The employment gauge fell to 43.9, the lowest since November 2020. This decline, excluding the COVID-19 pandemic period, marks the most significant drop since the 2007-08 global financial crisis.
The overall composite PMI rose slightly to 51.0 from 50.8 in January, narrowly exceeding the 50 threshold indicating growth. However, business confidence has decreased to a two-year low, influenced by concerns over the economy and an increase in employer social security contributions. Firms anticipate reduced demand due to lower consumer discretionary spending and cutbacks in business investment plans.
Input cost inflation slowed for the first time since last July, although it remained near January's nine-month high. Prices charged by firms also increased at a slightly slower rate than the previous month. The Bank of England is closely monitoring service prices as it assesses underlying inflation pressures and considers future interest rate adjustments.