UK private sector growth picks up as optimism rises after budget, but jobless rate hits four-year high – business live | Business

Newsflash: UK business growth is accelerating this month, thanks to a rise in new businesses, as the uncertainty created in the build-up to November’s budget fades.

The latest poll of UK purchasing managers shows that business activity growth across the UK private sector economy regained momentum, supported by the strongest upturn in new work since October 2024.

Data firm S&P Global reports that business activity accelerated in both the manufacturing and service sectors

This lifted its global flash UK PMI composite output index up to 52.1 in December, from 51.2 in November, which it says shows “a moderate increase in output levels”.

The PMI report also shows “a modest recovery in business activity expectations for the year ahead”, with business optimism was the second-highest since October 2024.

Chris Williamson, chief business economist at S&P Global Market Intelligence, explains:

“December’s flash PMI surveys brought welcome news on faster economic growth at the end of the year, with businesses buoyed in part by the post-Budget lifting of uncertainty. The PMI is consistent with GDP growth accelerating to 0.2% in December, albeit with a more modest 0.1% gain signalled for the fourth quarter as a whole.

It’s a big relief that business confidence has not slumped in a repeat of last year’s post-Budget gloom. 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. New orders are in fact growing at the fastest rate for over a year.

However, the overall pace of output and demand growth remains lacklustre, and the expansion is still very dependent on technology and financial services activity, with many other parts of the economy struggling to grow or in decline

However… today’s PMI report shows that firms continued to cut staffing numbers – employment decreased for the fifteenth successive month.

Williamson says firms are worried about rising staff costs:

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, especially as rising staff costs continue to be reported as one of the key concerns of businesses.

These higher cost pressures were in turn cited as the key cause of a renewed upturn in selling price inflation across both goods and services