A Conservative Party advert has claimed that “jobs are being slashed at the fastest rate since the financial crash as a direct result of Rachel Reeves’ tax raising budget”.
Evaluation
The advert cites a report from S&P Global, a well-respected industry survey, but that document says the proportion of companies that are reducing job numbers is the highest since the Covid-19 pandemic, not the 2009 financial crash.
If the data from the pandemic is excluded, then the proportion of companies cutting job numbers is the highest since 2009, according to S&P Global.
However, the PMI survey only measures employment in selected parts of the private sector, and does not include many businesses or those employed in the public sector.
The facts
The advert cites S&P Global PMI as the source of its claim. PMI stands for Purchasing Managers’ Index, and is a monthly report which gauges the health of business sectors within the economy.
The latest UK PMI report is a so-called “Flash PMI” released on January 24 – essentially a preliminary version of the full monthly report.
The report states that more companies it surveyed had reduced employee numbers in January than had increased their headcounts.
It also said the job reduction trend began in the October 2024 PMI report, which included data that was collected between October 10 and October 29. This was before Chancellor Rachel Reeves delivered her first Budget on October 30, although much of what Ms Reeves announced had been revealed before her speech.
In January’s Flash PMI figures, both manufacturing and service businesses reported they were shedding jobs; however, this trend was more pronounced in the services industry.
The report included feedback from companies, with many suggesting that measures announced in the Budget had “resulted in cutbacks to recruitment plans” while others “cited the impact of a post-Budget slump in business confidence”.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said: “Barring the job-cutting seen during the pandemic, the rate of job losses signalled by the PMI over the past two months has been the highest since the global financial crisis in 2009.”
The PMI data only measures employment in certain parts of the private sector and does not include the public sector, which employs around 18% of workers in the UK.
Links
S&P Global PMI Data – FAQ (archived)
S&P Global Flash UK PMI – January 2025 (archived)
S&P Global UK Services PMI – October 2024 (archived)
S&P Global UK Manufacturing PMI – October 2024 (archived)
Gov.uk – Autumn Budget 2024 (archived)
ONS – Comparing ONS’s economic data with IHS Markit and CIPS Purchasing Managers’ Index surveys (archived)
ONS – Public sector employment as % of total employment (archived)
