Business News Round Up (12/02/2024)
UK private sector hits decade low amid economic uncertainty
The UK private sector is experiencing its lowest employment levels in a decade, as hiring decisions are clouded by uncertainty surrounding economic prospects amidst high interest rates and sluggish consumer demand. According to the latest data from BDO, a leading accountancy and business advisory firm, the employment index has dropped for the seventh consecutive month to 98.77, marking its lowest point since August 2013, during the aftermath of the global financial crisis. This downward trend in hiring mirrors the subdued economic landscape, with projections indicating that the UK’s annual GDP growth will linger at a modest 0.6 per cent this year. Recent figures suggest the economy expanded by only 0.5 per cent last year, with indications pointing to a recession towards the end of 2023, as forecasted by analysts. BDO’s findings align with other indicators showing a cooling job market.
Scottish private sector activity rises for first time in six months
The latest Royal Bank of Scotland PMIs have revealed a renewed rise in business activity across the Scottish private sector at the start of the year. At 51.7, up from 49.4 in December, the index signalled that private sector output expanded for the first time in six months. The upturn was solely reliant on the gains made in the service sector, while manufacturers reported a further sharp reduction in production volumes. The service sector benefited from improved demand conditions and reported a second consecutive monthly rise in new orders. However, manufacturing firms struggled to drive sales in the latest survey period. The opposing pull of the sectors meant only a fractional fall in overall new orders. Reflective of activity and new order growth, only the service sector raised its staffing levels in January. Employment levels fell at manufacturers for the first time in four months.
https://www.insider.co.uk/news/scottish-private-sector-activity-rises-32087071
Winter recession to be confirmed for UK economy – but experts are upbeat about 2024
New figures are likely to confirm that the UK economy fell into a shallow recession in the second half of last year, but experts are hopeful that 2024 will be a better year. City economists think that UK GDP shrunk by 0.3% in December, meaning that the economy will have contracted 0.1% across the fourth quarter. December’s figures, set to be published on Thursday, will be weighed down by yet more strike action, which impacted both the health sector and rail industry. Retail sales figures showed the steepest drop since January 2021 which will hit activity in the all-important services sector. The flurry of storms in December is also likely to have constrained construction activity. The slight contraction in the final quarter of last year would come after a 0.1% contraction in the third quarter, meaning the UK will have fallen into a recession.
New year heralds return to growth for region’s private sector
The North West private sector economy began the year on a more solid footing, recording renewed upturns in both output and new business alongside a notable rise in employment, the latest NatWest Regional PMI survey showed. Price pressures in the region, meanwhile, eased slightly and remained among the lowest nationally. At 51.5 in January, up from December’s 48.8, the headline North West PMI Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors – registered above the 50.0 threshold that separates growth from contraction for the first time in six months. The latest reading signalled a modest rate of expansion that was slower than the UK average (52.9). After falling in each of the previous eight months, new business volumes across the North West private sector returned to growth in January.