UK services sector job cuts continue as companies automate, PMI survey shows

"The monthly purchasing managers' index showed employment numbers fell more sharply in January compared with December, continuing a trend that started in October 2024. The PMI survey, which is considered to be one of the most reliable indicators of how a sector is performing, said this was the longest period of job shedding in the UK services sector in 16 years, with firms also choosing not to replace voluntary leavers."

"The survey was released as investors attempted to digest the implications of artificial intelligence expected to automate work in the publishing and legal software industries. On Tuesday, Anthropic, the company behind the chatbot Claude, said its tool could automate legal work, sending shares in publishers and data companies falling sharply. The sell-off in those companies began in London and spread through global markets, continuing into Wednesday despite the FTSE 100 hitting a record high."

Companies in the UK services sector cut jobs in January, with employment falling more sharply than in December and continuing a trend that began in October 2024. The PMI recorded the longest period of job shedding in the sector in 16 years, with firms often choosing not to replace voluntary leavers. Anecdotal evidence indicated that some companies turned to automation to address staffing shortfalls and boost productivity, while squeezed margins and fragile market conditions dampened hiring. Services contribute nearly 80% of UK output and span industries from hospitality to legal and financial services. Investor concern over AI automation of publishing and legal work prompted heavy share sell-offs.

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