The UK services sector saw employment drop for the 23rd consecutive month in August, as businesses continued hiring freezes and reduced staff due to cost pressures. This marks the longest continuous period of workforce reductions in the sector since records began in 1996, according to S&P’s latest Purchasing Managers Index (PMI).
Rising operational costs, driven by surging fuel, transportation, and wage bills, have influenced business behaviour. Some firms have also adopted automation to boost productivity.
Despite the prolonged decline, the rate of job cuts in August slowed to its lowest level since October 2025, following a modest recovery in new business and domestic confidence. The PMI's headline reading for August was 52.5, a slight increase from 52.1 in July, remaining above the 50.0 mark that indicates sector growth.
Tim Moore, economics director at S&P Global Market Intelligence, noted that service providers are increasingly optimistic about the year ahead, with confidence levels nearing those seen before the Middle East conflict. However, business activity growth projections remain subdued compared to long-run trends due to ongoing concerns about inflationary pressures and geopolitical tensions.