UK services firms ‘cornerstone of economic growth’ as jobs market weakens
Accountancy firm BDO found the labour market continued to come under pressure last month with declining vacancies.
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Your support makes all the difference.The UK’s services sector has benefited from a later summer tourism boost, but the jobs market faced its worst month in more than a decade, according to new analysis.
Businesses across sectors from hospitality and culture to financial services and real estate have enjoyed greater levels of spending since the general election.
Accountancy and business advisory firm BDO’s report found that output across the services sector rose to a two-year high in August with a reading of 99.03.
Any score above 95 signals growth, and anything below is considered a contraction.
Growth was driven by an increase in new contracts, and summer tourism spurring more consumer and business spending, the report found.
BDO’s “poll of polls” looks at data from the UK’s most influential business surveys involving more than 4,000 companies.
No doubt all eyes will be on the autumn Budget and the Government’s plans for helping business tackle persistent unemployment levels and the skills gap
While firms across the services sector took on more staff last month to meet demand, the overall jobs market continues to come under pressure.
Looking only at employment, BDO’s index fell for the 14th consecutive month with a reading of 95.89 in August.
It means it is just above the threshold for growth, but the lowest score since January 2013.
The UK jobs market has faced a declining number of vacancies, with many businesses slowing or freezing hiring as they weather tougher economic conditions.
There were also more people claiming unemployment-related benefits in August, which reached its highest level since December 2021, according to figures from the Office for National Statistics.
Kaley Crossthwaite, a partner at BDO, said the services sector continued to be the “cornerstone of economic growth”.
“The coming months will be crucial in determining whether the UK can maintain its recovery momentum and fight back against these headwinds,” she added.
“No doubt all eyes will be on the autumn Budget and the Government’s plans for helping business tackle persistent unemployment levels and the skills gap.”